Hank Paulson's casting call
Just when you thought the financial crisis couldn't get any more melodramatic, Treasury Secretary Henry Paulson called the CEOs of the nation's nine largest banks to Washington last Monday for a meeting.
America Wants To Know has obtained an exclusive account of what went on in that room. Please don't ask us for our sources, you know we'll go to jail rather than reveal them.
It was Monday, October 13, 2008, Day 26 of Treasury Secretary Henry M. Paulson Jr.'s death-defying attempt to break David Blaine's record for running the global financial system without sleep or food. Secretary Paulson entered his ornate conference room, followed by Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair.
Waiting for him in the conference room, seated in alphabetical order along one side of the dark wood table, were the CEOs of the nation's nine largest banks.
Secretary Paulson smiled cheerfully at the bankers. "Thank you for coming, gentlemen," he said. "Let's get right to it. You've got the pages on the table in front of you. You'll be reading the part of Mr. Cribbs, the evil man who holds the mortgage on the widow Wilson's home. Chairman Bair will read the part of the widow Wilson." He consulted a list in front of him. "Richard Kovacevich, why don't you start."
The Wells Fargo CEO picked up the pages from the table and looked them over in confusion. "I'm sorry," he said, "What are we doing?"
"We're casting the part of Silas Cribbs," the Treasury Secretary said. "Just read the script, okay?"
Richard Kovacevich leafed through the pages, then placed them back on the table. "Look here," he said, "I represent a well-capitalized financial institution. I don't audition for second leads in schlocky melodramas."
"You'll audition like everybody else," the Treasury Secretary said grimly, "or you'll never work in show business again."
The Wells Fargo CEO jumped to his feet and looked like he was ready to throw a punch.
Fed Chairman Ben Bernanke held his hands out in front of him and patted the air. "Now, now, don't be upset," he said soothingly. "This is for the collective good. Just sit down."
"While I still can," the Wells Fargo CEO snapped.
"Gentlemen," the Treasury Secretary said, "Let me explain why I've called you here. As you know, my initial plan to have the government buy up non-performing mortgages ran into an unforeseen problem. As it turns out, somebody is going to have to foreclose on those people, and certain members of Congress were not happy to find out that they were the ones who would be expected to do it."
There was a general harumphing on the other side of the table.
"Therefore," the Treasury Secretary continued, "what the government has decided to do is force you to take a capital infusion you don't want in order to pressure you to make loans you wouldn't otherwise make in order to prop up the economy so people will keep making their mortgage payments on the houses they shouldn't have bought in the first place."
"For the collective good," the Fed chairman chimed in.
"Yes," the Treasury Secretary agreed. "I'm against this kind of thing, you understand."
There was another harumphing around the table.
"But after an extensive analysis," Secretary Paulson continued, "it has emerged that the entire global financial system is a three-card monte game played on the roof of a tract house in Riverside, California. And it has become necessary to keep it going until I can get a train out of town."
"I happen to have a train schedule with me," the Wells Fargo CEO volunteered.
"I'll get that from you later," Secretary Paulson said, "but right now, I'd like to hear you read. Sheila, do you have the script?"
FDIC Chairman Sheila Bair nodded.
"Very good. Richard, whenever you're ready."
"I'm not doing this," the Wells Fargo CEO said again.
"Fine, we'll come back to you," the Treasury Secretary said, consulting his list. "Vikram Pandit of Citigroup, you're next."
"I don't really...." the Citigroup CEO began.
"It's for the collective good," the Fed Chairman said.
"Let's go," the Treasury Secretary said. "Chairman Bair will read the part of the widow Wilson. From the top of page three, Sheila."
FDIC Chairman Sheila Bair sat up in her chair and stared plaintively at an imaginary horizon. "No, no, Mr. Cribbs!" she cried out. "Please don't foreclose on me! I just need more time! I'll find the money somewhere!"
There was a long silence.
The Treasury Secretary cleared his throat. "Vikram, it's your line."
Citigroup CEO Vikram Pandit stared at the pages in his hand. "Um," he said, "I really haven't done any acting since high school."
"Don't be nervous!" the Fed Chairman said warmly. "You'll do fine!"
"Let's start again," the Treasury Secretary said. "Chairman Bair?"
"No, no, Mr. Cribbs!" Sheila Bair read, more passionately this time, "Please don't foreclose on me! I just need more time! I'll find the money somewhere!"
Vikram Pandit shrugged and looked at the script. "You don't have the money, you'll never have the money, there's no more time," he read.
"Please, sir, please!" Sheila Bair read.
"What is this?" the Citigroup CEO asked the Treasury Secretary.
"Don't stop in the middle of the scene," Secretary Paulson snapped. "It's your line."
Vikram Pandit looked at the pages in his hand. "Where's your lovely daughter, Mary?" he read. He blinked. "What IS this?" he asked again.
Hank Paulson slammed his hand on the desk. "Now look, do you want to save capitalism or don't you?" he demanded. "All right, let's move on. Kenneth Lewis, you're next. From the top."
The Bank of America CEO shifted uncomfortably in his chair and picked up the pages of the script.
"No, no, Mr. Cribbs!" Sheila Bair read, "Please don't foreclose on me! I just need more time! I'll find the money somewhere!"
"You don't have the money, you'll never have the money, there's no more time," the Bank of America CEO read in a flat voice.
"Good, that's good," the Fed Chairman said.
"Please, sir, please!" Sheila Bair read.
"Where's your lovely daughter, Mary?" Ken Lewis read.
"Why, she's out back, feeding the chickens," Sheila Bair read, touching the back of her fingers to her forehead dramatically.
"Pull it back a little," the Treasury Secretary murmured to her.
"I want to marry your daughter," Bank of America's chief executive read, "or else I will foreclose on your property."
"No, Mr. Cribbs! Please! She's so young!"
There was a pause.
"Ha, ha, ha, ha, ha," Ken Lewis read flatly.
"No, no," the Treasury Secretary interrupted. "That's supposed to be an evil laugh. You see, it says, 'Cribbs gives an evil laugh.' Try it again."
Ken Lewis stared at him.
"That's all right, it's your first time through it, no problem, just try it again," the Treasury Secretary said.
"Ha, ha, HA!" Ken Lewis read, "Ha, HA!!"
"Oh, that was wonderful," the Fed Chairman said, "Much better!"
Ken Lewis threw the pages down on the table. "What the f***!!" he said. "What IS this?"
"This is a casting call," Secretary Paulson said. "Didn't your agent tell you?"
"Nobody told me anything," Ken Lewis said. He looked up and down the table at the other bankers. "Did any of you know about this?" he asked. The bankers shook their heads.
"It's all very confidential at this stage," Chairman Bernanke said. "We're casting for the role of villain. It all came up very suddenly."
"That's right," Secretary Paulson nodded. "The original script called for the government to buy up the bad mortgages. But when Barney Frank read the scene where he had to foreclose on Democratic constituents, well, he fired all the writers. So we decided to remake the 1940 Elbert Franklin script, "The Villain Still Pursued Her."
"It's much, much better," Chairman Bernanke said.
"Secretary Paulson is wonderful in it," Sheila Bair gushed.
"Thank you, Sheila," Secretary Paulson said, and a faint tinge of pink crept over his cheeks.
Ken Lewis looked at Vikram Pandit, and Vikram Pandit looked at Jamie Dimon, and Jamie Dimon looked at Lloyd Blankfein, and Lloyd Blankfein looked at John Thain, and nobody said anything. John Mack leafed through the pages of the script, reading in silence.
"Let's read your scene next, Hank," Chairman Bernanke suggested. "It starts on page seven. Jamie, why don't you read it with Sheila and Hank."
JP Morgan Chase CEO Jamie Dimon picked up the script from the table in front of him. "Page seven?" he asked uneasily, leafing through the pages.
"Yes, the top of page seven," the Fed Chairman said. "This is such a great scene!"
Jamie Dimon rested his chin on his left hand. "If Mary will not marry me," he read, "I will throw you off this land and sell it at auction."
"Oh, no!" Sheila Bair read. "Will no one come to my rescue?"
"I'll save you!" Secretary Paulson read in a deep, booming voice, "and Mary, too!"
"Oh, Mr. Secretary! Thank heaven you've arrived at last! I'd almost given up hope!"
"You must never give up hope!" Secretary Paulson read. "Your government is here to help! Unhand that woman!" he shouted.
The JP Morgan executive stared at him.
"It's your line," Secretary Paulson whispered.
Jamie Dimon continued to stare at him.
"What's the problem, are you missing a page?" Paulson asked. "Ben, give him your script."
Chairman Bernanke handed Jamie Dimon the loose pages.
The JP Morgan executive looked at the Treasury Secretary, then at the Fed Chairman, then at his watch, then at the script. "I hold the mortgage on this property," he read quietly. "She will do as I say or I will foreclose on her."
"Silas Cribbs, you black-hearted villain!" the Treasury Secretary read. "You will lose your golden parachute for this! Your name will be cursed in the halls of Congress and in the storefronts of Main Street! You'll be known forever in the annals of history as a greedy, heartless, corrupt, selfish, Wall Street fat cat! Why, you might even be investigated by the FBI, ruined, indicted, maybe jailed!"
"I don't want the part," Jamie Dimon said.
"Don't be an idiot," Secretary Paulson yelled. "It pays twenty-five billion dollars."
Chairman Bernanke tapped Secretary Paulson on the shoulder. "Should I get the wheelbarrows now?" he asked.
"Yes," the Secretary answered. "And bring one for me. I have to stop at the supermarket on the way home to pick up bread and milk."
Editor's note: You might be interested in the earlier posts, "Train wrecks," "Hank Paulson's pre-emptive war," and "The hilarious point of the bailout." (If you think this writer has inexplicably gotten it exactly right, you'll like her novel, "The 37th Amendment.")