Too Big to Fail (2011 TV Movie)

William Hurt: Henry Paulson

Photos 

Quotes 

• Michele Davis : I hate to do this right now, but I'm going to have to have a press call first thing, and I don't know what I'm going to tell them.

  Neel Kashkari : Tell them Lehman exacerbated AIG. The simultaneous payouts of CDOs and credit default swaps put catastrophic pressure...

  Henry Paulson : Go back further.

  Neel Kashkari : The global pool of investment capital...

  Henry Paulson : She has to do this in English! Start with the homeowners.

  Jim Wilkinson : Okay, okay, here's how you explain it.

  [clears throat] 

  Jim Wilkinson : Wall Street started bundling home loans together - mortgage-backed securities - and selling slices of those bundles to investors, and they were making big money. So they started pushing the lenders saying, "come on, we need more loans."

  Henry Paulson : The lenders had already given loans to borrowers with good credit, so they go bottom-feeding, they lower their criteria.

  Neel Kashkari : Before, you needed a credit score of 620 and a down payment of 20%; now they'll settle for 500, no money down.

  Jim Wilkinson : And the buyer, the regular guy on the street assumes that the experts know what they're doing. He's saying to himself, "if the bank's willing to loan me money, I must be able to afford it." So he reaches for the American Dream, he buys that house.

  Neel Kashkari : The banks knew securities based on shitbag mortgages were risky...

  Henry Paulson : You'll work on "shitbag"...

  Neel Kashkari : ...So to control their downside, the banks started buying a kind of insurance. If mortgages default, insurance company pays. Default swap. The banks insure their potential losses to move the risk off their books, so they can invest more, make more money.

  Henry Paulson : And while a lot of companies insured their stuff, one was dumb enough to take on an almost unbelievable amount of risk.

  Michele Davis : AIG.

  Jim Wilkinson : And you'll work on "dumb."

  Michele Davis : And when they ask me why they did that?

  Jim Wilkinson : Fees!

  Neel Kashkari : Hundreds of millions in fees.

  Henry Paulson : AIG figures the housing market would just keep going up. But then the unexpected happens.

  Jim Wilkinson : Housing prices go down.

  Neel Kashkari : The poor bastard who bought his dream house? The teaser rate on his mortgage runs out, his payments go up, he defaults.

  Henry Paulson : Mortgage-backed securities tank. AIG has to pay off the swaps. All of them. All over the world. At the same time.

  Neel Kashkari : AIG can't pay. AIG goes under. Every bank they insure books massive losses on the same day. And then they all go under. It all comes down.

  Michele Davis : [horrified]  The *whole* financial system?

  [Wilkinson nods] 

  Michele Davis : And what do I say when they ask me why it wasn't regulated?

  Henry Paulson : No one wanted to. We were making too much money.

  [Paulson gets up and goes into the washroom] 

  Jim Wilkinson : You'll work on, "we were making too much money."

• Henry Paulson : The Fed can lend to non-banks under "unusual and exigent circumstances". We're thinking of taking over 80% of the company.

  Jim Wilkinson : Hank, we can't! This morning we were lecturing the entire country on moral hazard.

  Henry Paulson : AIG has collateral, they have assets, Lehman didn't. We couldn't lend into a hole, it's not the same story!

  Jim Wilkinson : Nobody is going to care, it's another bailout! With no legislation, the Hill is gonna go crazy, the country is gonna go crazy...

  Henry Paulson : The plane we flew in on this morning, leased from AIG. Construction downtown, AIG. Life insurance, 81 million policies, with a face value of $1.9 *trillion*. Billions of dollars in teachers' pensions! It's everywhere! You want "too big to fail", here it is! You got a better idea, the suggestion box is wide open!

• Henry Paulson : There is not a bank in the world that has enough money in its vault to pay its depositors. It's all built on trust.

• Ben Bernanke : [Having breakfast with Henry Paulson]  Lehman's down another 10%.

  Henry Paulson : You are not gonna let me get down a single bite, are you?

  Ben Bernanke : This is why I have oatmeal.

• Chinese Official : There was an approach last month from Russia. They have considerable holdings in Fannie and Freddie as well. They suggested we coordinate and without warning dump hundreds of billions of Fannie and Freddie's bonds onto the market.

  Henry Paulson : [Flabbergasted]  That would be...

  Chinese Official : Chaos. The amount of debt your country carries is a terrible vulnerability.

  Henry Paulson : But you...

  Chinese Official : We declined. Respectfully. Even in the US it seems the relationship between the government and private industry isn't so simple.

• Ben Bernanke : [about the Chinese]  Was it a threat?

  Henry Paulson : No, no. A friendly reminder... that with a single phone call to Moscow they could take down the entire U.S. economy.

• Dan Jester : In that case, let's talk about cash injections.

  Jim Wilkinson : Here we go again.

  Henry Paulson : We can't nationalise the banks.

  Dan Jester : It's not nationalising...

  Henry Paulson : That's how Japan got itself a decade-long recession. Is that where we wanna go?

• Henry Paulson : [over the phone]  You better have good news, because I might be dead before we finish haggling over TARP.

  Timothy Geithner : [tired smile]  Buffett's throwing five billion into Goldman. We're off the ledge.

  Henry Paulson : [not consoled]  For the moment.