QuestionerI want to just go back to 2008 for a moment and just even started with a very big picture sense of it all. What do you think happened that led to 2008?
WarrenWell, I think the main thing, but, you know, there's all kinds of tributaries feeding into the Big Missouri River on this. But you had, people think that housing could do nothing but go up. And you had a $20 trillion market in residential housing. So it was a big, big asset class, and people started using it as a currency, basically. And they found out that it wasn't straight up in the end. And they borrowed on them. And there were levels of... levels of participation up and down the line. I mean, people at the top were writing mortgages that they knew they'd never have to hold, so they'd sell them to some way, but in Norway after they'd been put in a package. And you had people refinancing, figuring that didn't make any difference whether the monthly payments were too high, and you had them lying on loans, and you had the lenders participating in it. And you basically just had a huge speculation in housing. and 50 million of the 75 million owner-occupied homes in the United States were a mortgage, 25 million were free and clear. So they were okay. But you literally had a crash in the value of something that 50 million families owned, owned on margin, had thought we're going to go up. They'd based their living standards on it in many cases. They'd borrow the incident. And it was unlike any widespread financial participation, you know, anybody had ever seen. So it manifested itself in all kinds of ways. I mean, everybody behaved badly. But they believed, you know, and when people started believing something kind of crazy, you get that sort of thing.
QuestionerIt's early 2008. So the so-prone mortgage is sort of gathering steam. gathering steam. The stuff over the summer in 2007 had already happened with B&P PowerBoff, if you remember. Yeah. Hedge funds, a lot of subprime mortgages are going under. There were a couple. You had new century financial go down, countrywide, declare bankruptcy, or get sold. At that point, how worried were you? Do you remember being worried?
WarrenWell, I wasn't worried because I've always assumed that in a lifetime of participating in the American economy that's going to move forward. dramatically over time and also it's going to have a lot of hiccups. And, you know, it's just, it's part of our economic system that we will periodically have some
[3:09]
Warrencraziness go on. And so I don't try to predict markets or I don't try to predict business. I just try to adapt to what comes along. I did see in the summer of 2008, I got a call from one of the top officials of one of the of one of the main Wall Street firms trying to sell us many, many, many billions of equity securities in Freddie Mac. And I knew something was wrong. I mean, there's a, normally there's a market for Freddie a hundred different places in the world. But when they call us, they've run out of steam and then the roof fell in. The roof fell in. I mean, on September 1st, there were 35 million money market accounts, and everybody felt they were 100% good. And within a couple weeks, you had the conservatorship of Freddie and Fannie, and now you had 35 million people, particularly when Lehman fell, that were worried about, well, there were 3.5 trillion in money market funds, a couple trillion were in other than government money market funds. And if you've got people worried about $2 trillion in this country, you've got a panic like you. You've got a panic like you've never seen. And that's what we had.
QuestionerSo take us back, I don't know if you remember this, this is after Bear Stearns goes down. So this is before, before Fannie and Freddie, but after Bear Stearns, you get a call from Dick Fold. Right. And he tells you that his stock is getting killed by short sellers.
WarrenYeah. When anybody says that to me, I get very suspicious. I love to have short sellers in Berkshire. You know, how could a, how does a short sellers? And he says there's an opportunity for you to invest somewhere between $3 to $5 billion. Are you interested? I'm interested in hearing him out, yeah.
QuestionerAnd what did you tell him?
WarrenI told him, tell me what your ideas are, and I'll do some looking at it. But tell me what you'll pay first, and then I'll know whether I want to do some looking. And so he threw out some tentative ideas. I do remember, and actually, he said, can I have Hank Paulson call you? And so Hank Paulson called about, I think it was six or seven on a Friday night. And then he stopped short of giving a totally unqualified endorsement. But he was probably hoping I was going to finance it, but he wasn't going to try and sell me too hard. I'm sure he didn't feel that was right. he didn't feel that was right. So anyway, I spent that evening going through there probably a 10K. I've got it at the office still where I made notes as I went through it.
[6:09]
QuestionerAnd it was 250 or 300 pages. And I just wrote down on the front page, the number of the pages where I was finding problems. And when I go through, I knew that it was not for us. Because you saw what?
WarrenI just saw a lot of things that made me very worried about their financial condition. and what would be happening to them under the circumstances that were happening in Wall Street. And do you remember calling him back? He either called me or I called him. And what do you tell somebody like that when you're worried about their finances? Well, I just tell them. I'm not interested. I mean, I'd be as polite as possible. I don't tell him, I think. I don't start enumerating problems to him or anything. And what did you think of him, by the way? Well, I didn't know. that well. I'd probably only met him once at a dinner at the Treasury in Washington. I remember sat next to him. The reason I remember it was I accidentally spilled some wine on him. But I didn't have any strong opinion about it at all. It was clear, though, that in the kind of market that was developing they were going to need to get some money. from somebody, and of course they got money afterwards.
QuestionerFast forward, if you could now to, we talked with Andy Freddie over that summer, but now we're in September, September of 2008. And this is Friday, September 12th. This is the weekend. The weekend. The weekend. And you get a call this time, not from Lehman Brothers, but from AIG, asking if you'd be interested in investing $10 billion in the company. Yep. And Christopher Flowers is on the phone. Well, I don't remember, I don't remember, I mean, Chris at some point was on a phone. I also remember the CEO of AIG being on the phone. Yes. Bob Wilmstad also spoke to. Yeah, yeah. And what did you think? Well, I asked them to send me out. I was thinking about the domestic PC operation, perhaps the whole PC operation. So I asked them that they... Can I ask you to say what PC is?
WarrenProperty Casually operation and insurance. insurance. And I asked them if they would facsimile out some bunch of information I go down in the office that night, which I did. And what came through was not really useful. So I called back, I remember it's kind of hard to find them even in the building they were in. And I said that don't count on us. I know time is of the essence with you guys, so just don't waste it. on me. So I'm out at that point. They re-entered the picture a little later. But I said, I can't figure this thing out.
[9:07]
WarrenIt would have been $20-some billion. And we could have paid it if I'd know what we were getting. But I wouldn't be able to know. I wouldn't know what inter-company guarantees there were or anything else. And I don't think they knew. You know, whether maybe the property casualty companies hadn't guaranteed some things that financial products was doing. or whatever it might be. So anyway, I signed off on it. And that became a very interesting weekend from that point forward.
QuestionerDid you have a lot of risk? Did you, before this, did you think that AIG was in parallel?
WarrenI, just maybe 24 hours before it. I mean, there were some signals that were going out that they were going to have a big collateral call going on in the following week. Well, the very fact that they were calling me. and, you know, sending out stuff Friday evening at 8 or 9 o'clock in New York indicated they were in peril. So, I mean, it's a AAA company on that day. I mean, it wasn't going to be the next week, but when a AAA company is calling you nine or 10 at night and faxing things out to you, you know.
QuestionerWhat does a call to Warren Buffett mean, do you think?
WarrenWell, it means that they know we'll act fast if we like something. So we're the best fast buyer for anything that, in the best. involves in the billions of just about anybody. And they knew I'm interested in the property casualty business in this particular case. And you know that they are desperate for something that's going to close within a few days. Or they got a mining contract on it. So the next day, around 6 p.m., this Saturday, September 13th, you get a different call, this time on your cell phone from Bob Diamond of Barclays. That isn't quite right. The next day, I had a longstanding promise with Walter Scott to go to a charity dinner and performance in Edmonton. So I flew up with Walter, my wife and I flew up with Walter to Edmonton. We're in the hotel room in Edmonton and I didn't think anybody in the world would know where. I wasn't all of a sudden the phone rings. And then it's Bobbott. And he said we run under problems with the Brits on doing a deal with Lehman because there's some rule in the UK that the shareholders have to vote on it if it involves more than a guarantee of X billion. So we want to buy an insurance policy whereby you will guarantee that we perform on all our Lehman performs all of his contractual obligations until the British shareholders
[12:09]
Warrenof Barclays have had a chance to approve the deal. And I said, how big a guarantee you're talking about? And he said, unlimited. I said, well, that sounds a little unusual. But I said, send me the details. Tell me how much you'll pay. And whatever time I get back from this function tonight, I've got to go downstairs a little bit. But I will respond. I'll get back to you. And I'll probably get back to the room at 11 o'clock or so, a little time out there. And so I went down and watched the performance. Paul Anka was there. I came back up to the room and there was no facts for me. And I called down to the hotel manager. I said, it must be a mistake because there's supposed to be a fax for me. And he said, there's nothing here. And so I stayed up a while longer. And then finally I went to bed. And it turned out, of course, that instead of faxing, they'd sent me a phone message. And I got this little flip phone, and in fact, I still have it on me. It's the same phone from those days. And I didn't know, I don't know anything about phones. So I... I just figured something had gone wrong, and I went back to Omaha. And then that was in September of 2008 and in July of 2009. I was coming out to Sun Valley and landed, for some reason, it said something on the phone that they didn't understand. And so I said to my daughter, I said, tell me what's on here. And she flipped the messages. And there was a message from the previous September doing over the phone what they had said they would do by fax. So the message was received slightly late. So do you think things would have worked out differently? No. No. No. I don't know what, I still don't know. I mean, the message, they gave me some stuff and told me to call and all this. But the idea of making an unlimited guarantee that for 30, or probably it would be longer, probably be 45 days before they could call a meeting of Barclays, in that world that was existing. then with the whole world falling apart. Who knows what business Lehman might have been doing? And essentially, I'm guaranteeing their settlement on all of it. It would have been an unlimited exposure that wouldn't have made sense. They had to figure out some way to limit it. And I don't think that was a proposal. So I really don't think the world would change it. You know, a lot of people still look back at that weekend, and Lehman Brothers in particular, as the moment of the crisis and wonder whether the U.S. government should have stepped
[15:11]
Warrenin or not. The next morning, the New York Times and the Wall Street Journal both wrote op-eds, editorials praising. Yeah, sure. That's the way everybody felt the hell of those guys in Wall Street. We've had enough of them, you know, basically. And they would have had to save Leibon and AIG simultaneously, and by that either given the message or said this. If necessary, if it spread to Merrill. Not so happened, that was a deal on Sunday on Merrill, but that's going to take a while to close and everything. So they would have had to make huge overall guarantees. That was the question that they really faced. Now, I know they feel that on top of that they couldn't have, they didn't have the power to. But long ago, some Fed chairman told me that whatever the Fed thinks it can do, it could do. Now, that may have changed some under Hartscott. I mean, under Dodd-Frank, but that was the prevailing view of at least one Fed chairman of it.
QuestionerSo you think the Fed could have done it if they wanted to?
WarrenI think if I were chairman of the Fed, and I saw what was going on in the United States then, I think I would have done it whether I could do it or not. I mean, are they going to come down? The Supreme Court are going to send down to arrest me as President of the Fed. I mean, I would feel it would be an act that I should do in the interests of the country. If I were in that position.
QuestionerSo you think it was a mistake?
WarrenI don't know. I mean, because they'd have had to guarantee so much of public opinion. Can you imagine public opinion if all of a sudden, you know, people are losing their houses and facing, facing, they're being underwater on the, and all kinds of personal problems, and all of a sudden you've guaranteed that everybody at AIG is going to be okay, and everybody is going to be okay. I'm not sure it would have been... It would have been very tough to do.
QuestionerHow much political pressure at that time, do you remember, was on both Hank and the Fed and everybody, Kim's to bailout?
WarrenThat was huge. That was huge. I mean, I think that Bernanke, I think that Hank Paulson, I think that Tim Geithner, I think they did her, and I think George W. Bush did the right thing. I think they did, they were heroic. But you weren't going to sell that to the American people, and I don't blame them. I mean, all they knew was that they hadn't done anything wrong, and their world was falling apart. When people talk about the world falling apart, just put it, because you're so good at this,
[17:49]
Questionerput it in layman's terms, what do you think the edge of the cliff looked like? What was on the other side?
WarrenWell, eventually, the country, I mean, the farms don't go away. The farms don't go away. The houses don't go away. They all change hands, as Gertesstein said, you know. But we would ride ourselves, but you had this huge economic machine that has all kinds of productive capacity and people going to work every day and imaginative individuals coming up with new products and everything. But when the train goes off the tracks, when you won't deal with anybody else, when banks get worried about their intraday acceptance, you know, from other banks, which they did, and you can't blame them. I mean, when you think of, you know, tens or hundreds of billions of dollars flowing through there between opening and closing of the bank and all of a sudden you're balanced with some little bank that may go under that night becomes huge. I mean, the way the dominoes topple, what we really learned in that particular panic was the fact that we're all dominoes and we're all very close together. Now, it doesn't destroy, like I say, the planet, but when the machine gets good, dumbed up, it can take a long time. When people don't trust each other to do business with these, when you don't trust the people that you've sent three and a half billion dollars to in money market funds, like I said, maybe a billion and a half, I should say, three and a half trillion, a trillion and a half of that's in government-related money market funds, but when you have people worried about two trillion trillion dollars on that, they're going to freeze.
QuestionerTwo things. One is you had mentioned Domino's, and I think it's Ed Laffler. who has talked about this idea that maybe they're not dominoes, but they're like popcorn, that the skillet was so hot that even if you had picked off Lehman Brothers or AIG, the others would have still gone anyway. I'm curious how you think of that.
WarrenWell, they were, the dominoes were totally compressed. I mean, General Electric was in there, you know, general, every household name was there, and the question whether bank lines would be any bank lines would be any good. I've never counted on bank lines. I mean, you know, I mean, they want to, they want to do it. But self-preservation always comes first. And so when that, when, really, Freddie and Fannie tripped it off, because their paper was held all over the world.
[20:30]
WarrenAnd here, all of a sudden, these two institutions that either own or guarantee 45% of all the residential mortgage in the United States, $5 trillion almost, $5 trillion, those are big numbers in this world and all of a sudden they both have conservatorship. You wake up in early September and you find they're both a conservatorship. And then, you know, then, from that point on, we were in big trouble. Do you think they shouldn't have been put into conservatorship? Well, they had to be put in. I mean, the, as I remember, the federal government only had like a two and a half billion line or so. I mean, they had this little line, but all over the world, world people assumed it was government paper so so all of a sudden it's something that is financed all kinds of banks own their preferred stock that might be you know a big favorite with banks it was not cumulatory preferred instantly it was a very unusual instrument but it would have said to the world that the United States has stopped and the choice of how they did it you know I they didn't want to put they didn't want to put their debt on on the US balance sheet. I mean, they didn't want to take them over. That's why they'd pick the conservators. They didn't really want to take over the places. So fast forward a little bit farther to that week. So Lehman files for bankruptcy. Bank of America is now sold to, or Bank of America buys Merrill Lynch. AIG gets rescued. And yet there's still a serious anxiety that GE might go, Goldman's Axe. Morgan Stanley. Well, when there's still a serious anxiety that GE might go. When Lehman goes, the big commercial paper holders were money market funds. All of these companies you're naming were borrowing in the commercial paper market. So you knew that pretty soon the reserve funds of the world and all those would be selling commercial paper instead of buying it. And there wasn't to be anybody to buy commercial papers. I mean, there wasn't anybody to buy commercial papers. So, I mean, these things were just hitting one after another and both Hank and Bernanke had to worry very much about the congressional reaction to anything they did. Congress really didn't get it. George Bush got it. I give him great credit. I didn't vote for him, but I give him great credit for understanding just how big the problem was. And you get a call later in the week about Goldman Sachs? Yeah, that was, yeah, that was that week. Yeah, that was a Wednesday, I think.
[23:11]
QuestionerSo I think Byron calls you on Wednesday or Thursday. Yeah, Wednesday or Thursday. Do you remember that call? Do you remember that call?
WarrenI remember the call.
QuestionerYeah. When Goldman Sachs needs money, you'll remember. And what did you think?
WarrenI thought, I did think that we were in very good hands. Congress was one that scared me. I thought we were in good hands at the Fed. I thought we were in good hands at the Treasury. I thought we were in good hands at the presidency. And I thought that there was, there was, Goldman Sachs was sound under any situation except if markets just totally were closed up. If you could, anything creates discontinuity in markets. I mean, anything can happen then, because you've got hundreds and hundreds and hundreds and hundreds of thousands of contracts with derivatives on, you know, with people on each side, and you don't know whether either guys is going to be any good. So you can take anything but a stoppage. And I felt that, I felt the Goldman was okay. I felt that, I think the unsung hero of the whole thing, although it was a stupid thing to do. I think the unsung hero was, was Ken Lewis, Buying Merrill, I mean, Merrill would have been there on Monday morning. You know, I think he got some fairness opinion that said it was okay to pay 30 bucks. He got, I think he got it twice between Saturday at noon or something, and the deal getting announced on Sunday morning. Nobody knew what Merrill was worth at that time. But he got the fairness opinion and he said, we'll pay whatever it was $30 in thereabouts. It wouldn't have been worth 30 cents on money. Big mistake, then. Well, it wasn't for the system. And incidentary has worked out fine subsequently, but I mean, under the conditions that existed, on Monday morning, if Bank of American announced that purchase on Sunday, it wouldn't have just been Lehman. The second that Lehman would not have been, if they backed away from Lehman, they'd have to tell Merrill to stand on its own, too, and bingo, bingo.
QuestionerWhen you look back in retrospect, is there anything you wish that you had done that you didn't do? Any investments that you wish you could have made given?
WarrenI can look back on any week and come up with that. I mean, the situation, we'd have been better off, considerably better off at Berkshire, if we waited four or five months to buy anything. I mean, the low was set in March, and it was much lower than that.
[25:43]
QuestionerI wrote that op-ed for the New York Times in late October. It was right on a long-term basis. It was right on a long-term basis. but it was way off for three or four months, four or five months at least. And let me ask you one other things just about, this goes to the Domino thing a little bit. Was there ever a moment that you thought that the system would gum up so much that people, I mean, that we would be back in sort of a great depression, that there really would be red lines? I mean, people...
WarrenIt could have, it mishandled it could have. It could have lasted quite a while. It wouldn't have lasted as long as them. But it would have really gum things up. There's no question. They're already gummed up, but it would have, at some point, the government has to step in. I mean, when everybody in the world wants to de-leverage, there's only one party that can leverage up. There's just one party. And if for some reason they don't do it, you've had it, I mean, in the economy, you know, you walk down there with sell orders, home, sell orders, stock, sell orders of everything. And there is no buyer. And when you look back now, is there a great lesson, do you think, for the public, for new generations of people who are going to hopefully learn about and think about this crisis? No, because the answer is people have always panic. I mean, that's why they set up the Fed. We had all kinds of panics in this country in the 19th century. And, no, people, when people are fearful, they, it's they, it's instantaneous transmission to everyone else. I went to a party, actually, a wealthy friend of mine sometime in September, and all of a sudden, 50 people there, you know, who owned their homes outright and everything else, but they had a little money, my friend. All of a sudden, every single one of them, that's all I wanted to talk about, because when people are afraid, they are afraid. Confidence comes back one at a time, but fear is instantaneous. If there weren't an FDIC, and you own one bank in a small town. The only thing can do is hire a bunch of movie actors and have them get in line at the other bank. You know, and you can put the other guy out of business. The only problem is it'll come over to you too. As soon as they can't pay, then they'll figure, well, I better get my money out of the other bank. Fear just spreads like nothing you've ever seen. And it doesn't make any difference how sophisticated people are,
[28:12]
Warrenwhether they've got PhDs or anything else. When they are afraid, they are afraid. I know a number of people that would surprise you who who during that panic period subsequently went right to gold and felt that nothing would be worth anything. And, you know, I mean, people really, fear is extraordinary with most people. That's the advantage I've got. I mean, frankly, it isn't IQ, at all. But it's, you know, I'm not going to get fearful about the United States over time.
QuestionerDo you draw any parallel or connection? a parallel connection between the crisis 10 years ago now and the politics of today and the distrust of institutions and governments.
WarrenSure. People have long memories just like they did after 1929. It took a long time. I mean, people, when they've experienced extreme fear, it sears something into them where they, A, they want to know who did it to them. And they correctly don't blame themselves. don't blame themselves. I mean, you know, they're not supposed to be finance experts or anything. All they did it was buy a house and lie a little bit on their loan application, you know, just figured it was going to go up and then they'd refinance and so on. I mean, who's going to blame anybody for that? So it will, it's still affecting. When I went to school at Columbia in 1950, we still saw on stock values. saw in stock valuations and things like that, prices people would pay for businesses. We still saw the fear from 29, and you have to, the number of people of the stock market in 1929 compared to the people with the number of homeowners in 2008, there's no comparison. So this was deeper in that sense. Where we are today, do you worry about another crisis? Well, there'll be one sometime, but, no, I don't worry about it in the least. Because? Because I conduct myself so that there's another crisis, I'll also be. Well, to be around, Berkshaw will be in good shape. But when you look around and to the extent you worry about anything for the country, if not yourself, what do you look around today and say, okay, I've got to be anxious about that? Well, I don't see big signs of anything now, but that's the nature of things early on. But asset appreciation draws in people that really don't know anything about the asset. people start, they start being interested in something because it's going up, not because they understand or anything else, but the guy next door who they know is dumber than they are,
[30:59]
Warrenis getting rich, and they aren't, and their spouse is saying, you know, can't you figure it out too? And I mean, it is so contagious. So that's a permanent part of the system. But in terms of the specific excesses, I don't see them now, no. And just going back to one of the things you said, is there anyone to blame for the crisis? Because that's been also a political... You can blame a lot of people for doing very foolish things. But I don't think anybody was... I mean, there's a certain number of people who are doing crooked things all the time. And to some extent, they were attracted to the real estate market, because the money was flowing so easily. I mean, when you can create a mortgage in Bakersfield, California, and sell out to somebody in Norway, and then when you get these permutations of these things where you get one instrument that's... I made a calculation once on one security I saw that had been raided by the agencies, and I'd had to read 300,000 pages in order to understand both the primary security and then the ones that it was depended on and so on. And it just gets, you know, and nothing goes wrong for a while, so everybody gets used to doing it. It's, it'll happen again. It'll happen again. But that's okay. I mean, you should conduct yourself so that you don't... You don't have to get killed by it. If you own a farm outright, if you own a business outright, in our case, the only thing we had to be sure that we did was we never owned commercial paper, and we've never owned it since. Are we better prepared for another crisis? Do you look at either the regulations or? That's an interesting question because I've never read Dodd-Frank in full 2000 plus paid. I've read little summaries. I have the impression, and I may be wrong on this, but I have the impression that it's somewhat somewhat weakens the ability of the Fed to act promptly and unilaterally. And I would say that's a terrible mistake. Now, people get mad at how the Fed operates. I mean, they stick it in there because they're mad about what happened in the past, and then, you know, these guys have too much power, and they could print money. Well, it's a good thing they could print money because we needed money. So I think we could be. We could be better off in many respects for it. And like I said, I have not read it, but I have been told by people that have read it, that it actually does not leave the Fed as powerful as before,
[33:33]
Warrenand we need a powerful Fed. You may not like them. They may do things that bother you. But you need somebody that if this country with now 100 trillion, and the household wealth, you know, with now 75 million plus, that it doesn't come to a stop because everybody's trying to de leverage.
QuestionerIn layman's terms, how devastating do you think it would have been for the economy if it had frozen up completely for the man on the street?
WarrenWell, anything that slows down the economy means you really aren't using our productive capacity to the extent that we have it. I mean, the country is as rich as, as it. as its output is every year. And if you do something that depresses output from its maximum possibilities, and there can be a lot of things you could do along that line, but this would be one on a very big scale. Anything you do that slows down the economy from its productive capacity, I mean, you basically have, you hurt people, which people you hurt, who knows. And then you've got to count on how political sentiment will react to that, and they're going to want to put. publish, they were going to want to punish the people who they think did it to them. They're going to want to punish Wall Street, rightly in many respects. They're going to want to punish big business. I mean, they're going to want to punish somebody. I would, too, if my life got all messed up because of something I didn't understand, I would, you know, I would be upset about it. I'd vote for whoever promised me that I'll get the guys that did it to you.
QuestionerIn terms of just the sheer panic for you, was there? for you was there ever? I mean, you're not a panic kind of guy.
WarrenNo, not a panic kind of guy. But you took calls, I assume. Was there ever a moment in that week where you, either between everybody calling you were talking, you thought, wow, we really, this is...
QuestionerWell, I described it actually on CNBC as an economic Pearl Harbor.
WarrenThat's not a term I've ever used before. So, I mean, I was using, I felt it was something different than I'd ever seen. And I felt it was actually worse than 29, in a sense, in terms of the immediate panic. that was induced. In 1929, if you remember, in September 29, the Dow hit a high of 381, and then it collapsed in the fall, but I was born August 30th in 1930, and it was back up to 250-some by that point. I mean, we didn't, it didn't hit that many people. It, you know, it hit everybody on Wall Street, but Wall Street wasn't as broad than remotely
[36:09]
Questioneras it is now, you know, in 401Ks or whatever it may be. So this Holmes, that touches everybody. Before you, I don't know if you had thought about it before you said it, but when you thought about describing it as an economic Pearl Harbor, how did you...
WarrenI just meant that the country had had a blow of an economic sort that was really equivalent to what we, the blow we suffered at the time of Pearl Harbor. I mean, we had, we had been hit in a way that 99 and a half percent of the people, thought couldn't happen and Congress thought it couldn't happen and they'd never seen the world try and de-deverage trillions and trillions and trillions and trillions and trillions. And, you know, Fannie and Freddie, they're no good, you know. Now the government says it's going to stand behind them, but you know you're in trouble when that sort of thing starts happening. And you know that, you know, it's going to be the auto industry, it's going to be, it's going to be everything, you know. And if you get, the first tarp did not pass, as you know, And that, I still, I still couldn't believe it wouldn't continue that way. But if I, if you were inclined to be afraid of anything, that would be the time to be afraid.
QuestionerLet me ask you one other question, which is, how often did you get calls from Hank Paulson?
WarrenNot very often. No, no, practically very few times. And never, maybe later on, Bernanke called me. But I was not getting a lot of calls. I got, I got one. And one call at the time of Wells Fargo when they wanted that reintroduced. And I got one or two other interesting calls, but I had no calls with the President of the United States, for example. And I didn't know, I mean, the pressure that Hank was under, was incredible. I did get a call. I was the Virginia Tech, Nebraska football game. It was a night football game in late September. And when they sought me out. at the stadium to say there was a phone call coming from Washington I should take. I figured this is getting pretty serious by that point. That may have been about the Pearl Harbor time.
QuestionerWho called?
WarrenIt was, it was a senator that wanted help on persuading Hank that they should stick in any bill of limitations on on bank. banker's salaries. I mean, they wanted to punish bankers, basically.
QuestionerWhat did you think about that, by the way, when they were doing TARP?
WarrenWell, I thought TARP and I, actually on October 1st of 2000 A is on Charlie Rose program,
[39:11]
Warrenwhere I, they were still talking about TARP applying to buying distressed assets from banks. And I actually suggested an RFC reconstruction finance court model, which came from the 1930s. In matter of fact, Catherine Graham, Washington Post's father was the first head of the RFC. Believe it or not, he was appointed by Hoover. But then Roosevelt came along and put Jesse Jones in charge. And the RFC was very, very, very, very helpful in terms of putting the economy together again at that time. And in effect, that's what was done about two weeks later. But at that time, it wasn't being talked about. And I don't know what went on at that time, but it may have been that the Treasury didn't feel that Congress would accept anything that extreme, although it wouldn't have been that extreme in terms of the historical precedent.