All language subtitles for The.2000s.S01E05.The.Financial.Crisis.1080p.NF.WEB-DL.DDP2.0.x264-DEEP_track3_[eng]

[dramatic music]

♪ ♪

- The subprime mortgage crisis

has left millions of Americans

struggling to stay

in their homes

and Wall Street is feeling

their pain.

- This is the biggest point

drop that has ever been seen.

- If Lehman can go down

what does that mean about

the health of the American

financial system?

- We're in the midst of

a serious financial crisis,

and the federal government

is responding

with decisive action.

- These guys have

been gambling

with the house money

for years

and it's our job

to bail them out?

- They lived by

the free market,

let them die by

the free market.

- The largest swindle

in Wall Street history,

an alleged $50 billion Ponzi

scheme by Bernard Madoff.

- Every corporate official

who has chosen

to commit a crime

can expect

to face the consequences.

- Belong in jail!

- You belong in jail, you...

Both: Criminal!

- The party is over.

[dramatic music]

♪ ♪

♪ ♪

- Why?

all: Why?

- It is the chosen word

of the non-conformist,

the defiant,

and the visionary.

If you are not afraid

to ask why...

- Why?

- You can change

whatever it is you want.

- Why?

Why?

Why?

♪ ♪

- If there was any company

that could make energy cool

it was Enron.

- The Texas energy broker

trade electricity

like any other commodity.

A sophisticated trading

operation

buys and sells billions

of dollars worth

of energy every day.

It's the largest company

of its kind in the world.

- Enron is a company

that deals with everyone

with absolute integrity.

We play by all the rules.

We stand by our word.

We mean what we say.

We say what we mean.

- Ken Lay was

the original CEO.

He ran Enron

when the company was created

out of the merger

of two pipeline companies.

He seemed like the ultimate

American success story.

- Ken Lay hired Jeff Skilling

to innovate

into commodity trading.

- Every year,

every day, every week,

you have to come up

with new ideas.

- He was very charismatic.

When you heard

a "rah-rah" speech of his

you just felt energized.

I've likened him

to a cult leader

because he really could get

you to drink the Kool-Aid.

- We are doing

the right thing.

We are working to create open,

competitive, fair markets.

And in open,

competitive, fair markets

prices are lower and customers

get better service.

- You're the good guys?

- We are the good guys.

We are on the side of angels.

- The pendulum in business,

as in many other aspects,

tends to swing too far

in either direction,

and this was an era

of de-regulation.

- The de-regulation of the

energy industry in California

is causing one problem

after another.

- Enron was very good

at weakening

existing rules and regulations

and then taking advantage

of the space

between the rules.

- In the midst

of this heat wave

an energy emergency has been

declared in California today.

- Californians could be

spending

part of another day

in the dark.

- The energy crisis

in California

was not just

a force of nature.

It was a result

of market manipulation

by energy generators

and producers like Enron.

ENRON TRADER: I want you

guys to

get a little creative...

PLANET OPERATOR: Okay.

ENRON TRADER: ...and come

up with a reason

to go down.

PLANT OPERATOR: Okay, so

we're just coming down for

some maintenance, like a

forced outage type thing?

ENRON TRADER: Right.

PLANT OPERATOR:

And that's cool?

ENRON TRADER: Hopefully.

- They were gaming

their system,

withholding power

at the borders,

taking power plants offline,

and it was devastating

to California's economy.

ENRON TRADER: They had to do

a rolling blackout through

the town and there was

a red light there

he didn't see.

ENRON TRAADER 2:

That's beautiful.

ENRON TRADER 1:

This is causing animosity

throughout the state now.

Cars are blowing up.

- They had strategies

for raping and pillaging

California

called "Death Star,"

"Get Shorty," "Ricochet."

- As the lights went out

on the West Coast

Enron's wholesale revenues

quadrupled

from $12 billion

to 48 billion,

and doubled again

three months later.

- Every time there was

a shortage

or a little bit

of a price spike

it's always collusion,

or conspiracy, or something.

It always makes people

feel better that way.

- But you know as well

as I do that the price--

it's nice for a business.

You're in the business

of making money

for your shareholders, right?

As a company.

- Yeah.

- So, you would be foolish,

as you say,

to turn down

the kind of money

you could make

this past winter in California.

Isn't there--

- I think you put words

in my mouth there.

- What happened

in California

was a flashing red signal

about the nature

of what Enron was all about.

But what brought them down

was just the sheer brazenness

and the scope

of their manipulation.

- The SCC

is now investigating

Enron's accounting procedures

after the company admitted

it inflated earnings

by more than

half a billion dollars.

- Enron, the OFEs.

- Enron had businesses

that were losing

immense amounts of money.

And so the company CFO,

Andy Fastow,

found extremely creative

accounting methods

in order to hide the losses,

hide the debt,

show investors profits

that didn't actually exist yet

in order to please Wall Street

and keep its stock price high.

- This week it was revealed

that in the very same period

when an in-house

whistle-blower

named Sherron Watkins

was privately warning

Chairman Ken Lay that...

Lay was assuring

employees that...

And in fact urging them

to buy more company stock.

- Leadership knew

that we had cooked the books,

and yet Ken Lay,

through the fall of 2001,

was still selling stock,

telling others to buy,

but he was dumping.

- They got theirs,

but we're not gonna get ours.

- Wooten and many others

who work for Enron

or a subsidiary saw

their retirement nest eggs,

made up heavily

of Enron shares,

wiped out this month.

Worse, they are powerless

to stop the hemorrhaging

because Enron has blocked them

from making any changes

in their retirement plans.

- When I saw the stock drop

I called to sell,

and was told

that I was locked out.

So I had to stand by

and watch my savings disappear.

- Many of the nation's

top banks and mutual funds

were also heavily invested

in Enron.

The company is widely expected

to become

the biggest bankruptcy case

in history.

- Enron was the moment

that we realized that so much

of the business world

was not what we thought.

- Something is very wrong

in the case of Enron.

A lot of knowledgeable people

on Wall Street

were either duped

or purposefully

went along for the ride

at the expense

of thousands of others.

This is not a story

of a few bad people.

This is a story

of a lot of bad people.

They were aided and abetted

by accountants, by lawyers.

There was no cop

on the beat.

You gotta put limits

on the greed

that drives a whole

lot of people.

- Enron's Kenneth Lay

and Jeffrey Skilling

were once among

the most celebrated

business leaders in America.

Tonight

they are convicted felons.

- Enron was just

the first domino.

It was followed by WorldCom,

by HealthSouth,

by Tyco, by one accounting

fraud after another,

on, and on,

and on.

This belief

that giant corporations

are going to be restrained

from running amok

was revealed in this decade

to be basically

a fairy story

we tell ourselves at night

so we can sleep better.

- No executive is too prominent

or too powerful

and no scheme to defraud

is too complex or too fancy

to avoid

the long arm of the law.

[applause]

- Thank you, all.

Please be seated.

I am here today

because we are taking action

to bring many thousands

of Americans

closer to owning a home.

- Home ownership

had been expanding

during the early and mid 2000s.

A part of this comes from

President Bush's

administration

really making this a priority.

- One of the biggest hurdles

of home ownership

is getting money

for a down payment.

And so today I am honored

to be here

to sign a law that will help

many low-income buyers

to overcome that hurdle

and to achieve

an important part

of the American Dream.

- This was everything Americans

were supposed to want,

the security and stability

of owning their home.

And so you were supposed

to borrow money.

Maybe you were even supposed

to stretch a little bit.

Because after all,

since the Great Depression

on average nationwide

home prices had only gone up.

- If there's one area

of the economy

that has stood its ground

it's the housing market.

Still a hot market fueled

by low interest rates

in hopes that real estate will

offer not only a safe haven,

but will continue

to gain value.

- John and Camille Carter

are joining

the growing number

of first-time home buyers.

Convinced the time is right

thanks to dropping

interest rates.

- We pre-qualified

a week ago

and they've went

down since then

so it's kind of amazing.

We're like, "We better buy

something this week."

- Everyone was talking

about property.

They all saw buying a house

as the kind of,

the main way to get wealth.

House prices kept going up

so it seemed like a no-risk,

no-brainer thing to do.

- Across the U.S.

mortgage applications

hit an all-time

high last week.

- Current homeowners

taking advantage

of lower interest rates too,

refinancing their homes

as Americans seek

to lower payments

and put more cash

in their wallets.

- This business has gotten

so competitive

and so aggressive

because everyone wants

a piece of the American Dream,

the housing market.

And there was this rampant fear

of missing out.

People started flipping houses.

They were quitting their jobs

to buy houses

and to sell them

at a higher price.

- I don't see a bubble.

I see prices continuing

to climb at a steady rate.

- There was a sort

of euphoria where

the American Dream

of owning a home converged

with the American Dream

of risk-free investment,

or you might say the myth

of risk-free investments.

[tense music]

- New numbers out tonight

suggest more than ever

that the housing sector

of the American economy

is something

of a house of cards.

- The housing bubble started

to come undone in 2006, 2007,

and suddenly people started

to default,

and then they started

to default in big numbers.

It really became

a domino effect

and that devastated

whole communities.

- From bad to worse

in the mortgage meltdown

home prices experience

their biggest drop

in more than 20 years.

- Two out of ten

who bought their homes

in the last two years

are already upside down.

- There were good intentions

in this country

about increased

home ownership,

but in the last years

of the bubble

that's ground cover for some

very pernicious activities.

- In the last six months

Americans have seen

their investments shrink,

their property values plummet,

and the country edge closer

towards a recession,

and at the heart

of the problem

is something called

the subprime mortgage crisis.

- Loans made to borrowers

with low credit scores

or no money

for a down payment

are commonly called

subprime mortgages,

and the market for them

has exploded

in this country of late.

- There's some decent aspects

to subprime lending.

It's an effort

to reach people

maybe whos credit

isn't as good.

An effort to try

to give them the ability

to move up and to reach

the home-ownership dream.

- But like so much else,

it starts as a good idea

that eventually gets perverted.

That's--honestly,

the history of the modern age

of finance is that.

- Washington has pretty much

failed miserably

for the last 10, 20 years

as the mortgage lending market

has changed.

What Washington

has been concerned about

is making it easier

for lenders

to make loans

without requiring them

to do some due diligence.

- It became possible

to walk into a mortgage broker

and buy a house

with no provable income,

no assets, and maybe not

even using your real name.

- People were saying

to themselves,

Eh, you're gonna give me

a mortgage

"when I don't have

any money in the bank?

"When I don't have a job?

When I can lie on my form

"and sign it and you'll give

me the money anyway?

"Essentially giving me

a free option to buy a home?

I'll do that all day long."

People love free options.

- Now, one company considered

an innovator

in these risky loans

and one that aggressively

pursued that market,

was Countrywide Financial.

The company made a fortune

and so did its CEO.

- This may well become

the deeply tanned face

of the mortgage mess.

The face belongs

to Angelo Mozilo,

the once celebrated CEO

of Countrywide.

Now facing allegations

of predatory lending

and rapacious greed.

- If you don't bear

personal responsibility

I don't know who does.

- I do take full responsibility

for anything that happens

at Countrywide.

- Mortgage lenders like

AmeriQuest,

and Countrywide,

and New century

concocted a whole series

of loan products

pedaling them aggressively

to people

who did not have the ability

to pay those loans back.

- When they say, "Sign here.

Sign here. Sign here."

And they tell you that they've

told you everything

that's important about the loan

you think they have

and you just sign.

- [sobs]

I just feel so stupid.

- The whole system

was designed

to go after people

with marginal means

and then to put them in

the highest cost loan possible

'cause those are the ones

that paid the most fees.

- The banks didn't have

to care anymore

about whether the loan

got paid back

because the loan had been sold

to Wall Street.

- Instead of keeping

the dicey loans

in their own portfolios,

the big banks

and giant mortgage companies

that originally underwrote them

sold them off to big

New York investment houses.

- Firms like Bear Stearns

and Merrill Lynch

sliced the loans

into little pieces,

packaged them up

with other investments,

then sold them

to their best customers

around the world

as high-yield,

mortgage backed securities,

turning sows' ears

into silk purses.

- Instead just buying

one mortgage

they would take a thousand,

put them into a package,

and then cut them

into a thousand pieces,

and then sell the pieces

as a much safer investment.

- The idea was

that all this

was diversified in

a hundred different ways,

everybody had little,

little pieces of it

and therefore if one of

the little pieces went down,

the other piece

wouldn't go down.

But that was the fallacy

of the whole scheme.

- From Main Street

to Wall Street

today's foreclosure numbers

are foreboding.

- They're rising so fast

that they could soon involve

one in a hundred

American homes.

- The fact that millions

of Americans

were getting mortgages that

they should never have had.

That's kind of

an isolated virus,

but Wall Street,

ooh.

Wall Street sent the virus

all around the world.

- Good evening,

there is no shortage

of evidence showing

a U.S. economy either

already in recession

or heading there.

Every day there is

a new shock to the system.

- The housing slump has turned

many lives

and bank accounts upside down.

- The DOW futures down sharply

for today's open

as more banks report losses

in the billions.

- Mr. President,

economists say

that the nation is at

increasing risk of recession.

What do you say?

- I say that

the fundamentals

of our nation's economy

are strong.

- Firms began

to announce losses

from subprime mortgage

backed securities,

but the whole idea was

this is under control.

And Ben Bernanke,

who was then

the chairman

of the Federal Reserve,

and Hank Paulson,

who was then

the secretary

of the treasury said,

basically, this is contained.

- The U.S. economy

is diverse and resilient

and our long-term fundamentals

are healthy.

I believe that our economy

will continue to grow

although at a lesser pace

than we have seen

in recent years.

- Hank Paulson had been

the chief executive

of Goldman Sachs.

So he was an insider

for better or worse.

He knew where

the bodies were buried

and he knew

how these markets work.

- Testifying before

a House committee,

Federal Reserve Chairman,

Ben Bernanke,

through his weight

behind a stimulus package.

- Getting money to people

quickly is good

and getting money to low-

and moderate-income people

is good in the sense

of getting bang for buck.

- Ben Bernanke was an expert

in the Great Depression.

His one focus was to avoid

another Great Depression

in this country,

and here we enter

the Great Recession.

- The fallout from

the country's mortgage mess

deepened today.

A major Wall Street firm,

Bear Sterns,

reported its first

quarterly loss

in its 84-year history.

- Bear Sterns was

an investment bank,

and investment banks

are not the same as banks.

They do not have

small depositors.

You and I cannot go in

and open up an account.

Investment bank clients

are very sophisticated

investors

who both do

and should know

the risk of the institution

when they do business

with them.

- Bear Sterns was one

of Wall Street's major firms,

but with a slightly riskier,

edgier reputation.

- Wherein Goldman Sachs

is the queen

and Morgan Stanley is--

you know, went to Harvard,

Bear Sterns was

the guy flipping you the bird

in a corner.

And it had probably

a greater percentage

of this toxic sludge,

mortgage backed securities

in its vaults

than anybody else.

- It's been a hard week

for shares at Bear Stearns

as the firm has been buffeted

by constant rumors

of a looming liquidity problem.

Bear maintains

that its balance sheet,

capital positions, all strong.

- Questioning a Wall Street

firm's liquidity

is very much akin to yelling

fire in a crowded movie house.

Once that cat is out the bag

it risks triggering a stampede.

- Should I be worried

about Bear Stearns

in terms of liquidity

and get my money out of there?

No! No! No!

Bear Stearns is fine.

Do not take your money out.

- Our liquidity position

has not changed at all.

Our balance sheet

has not weakened at all.

- If you have to prove

that you have credit,

you don't have any.

If you have to prove

that these assets

are worth what

you say they are, they're not.

That dawning fear

that all of these mortgages

might not be strong

and reliable

suddenly had

everybody second-guessing.

- For weeks there

had been whispers

of trouble at Bear Stearns.

by today's opening bell

it was a full-blown alarm.

This morning,

Schwartz said

that the firm's cash position

had deteriorated sharply

over the past day.

- The rumor became

the reality.

All the rumors got

way too ahead

of even the people's ability

to manage it

and that's really the story.

- Who could possibly imagine

that Bear Stearns,

after 85 years

of profitability,

never having a losing quarter,

would have a losing quarter

in the fourth quarter of 2007

and be out of business

2 1/2 months later,

in a week?

- The fact that

a Wall Street firm

could lose 90%

of its value

in one weekend

has some convinced

the markets and the economy

have farther to fall.

- While most of the country

was looking at this

as one investment firm

that maybe you've heard of,

maybe you haven't,

is teetering.

It's a very different story

in Washington.

- An investment bank

collapse,

one as big as Bear Stearns

is what Wall Street experts

would have called

an economic nightmare scenario.

Here's the good news,

it's been averted.

Bear Stearns has been

bailed out by the government,

and now they've been

bought out by a competitor.

- The federal government

had never stepped in before

in the history of our republic

to save an investment bank,

but the Fed decided to change

that in Bear Stearns' case

because they decided

that it wasn't because

Bear Stearns was too big

to fail as we'd like to say.

It was too

inter-connected to fail.

- Given the current

exceptional pressures

on the global economy

and financial system

the damage caused

by a default by Bear Stearns

could have been severe

and extremely difficult

to contain.

- The Fed knows this

isn't just one firm.

That when one tall building

on Wall Street falls

it's probably gonna land

on another one.

Which could land

on another one.

And it was

that institutional risk,

the idea that you might have

an uncontrollable fire

on Wall Street

that primarily

concerned Bernanke

and the policymakers

in Washington.

- I think the big question

on a lot of people's minds is

are there other banks

in a situation similar

to Bear Stearns right now.

Is this just the beginning?

- Well,

our financial institutions,

our banks and investment banks,

are very strong.

And I'm convinced

that they're gonna

come out of

this situation very strong.

Our markets are resilient,

they're flexible.

I'm quite confident

we're gonna

work our way

through this situation.

- After Bear Stearns collapsed

most people kind of thought,

"Oh, whew.

We dodged that bullet."

I mean,

there was debate about it,

there was criticism

of the government stepping in,

but the sense was

it was a ripple.

You know, not a bombshell.

There's no question about it...

Wall Street got drunk.

That's one of the

reasons I asked you

to turn off your

TV cameras.

It got drunk, and

now it's got a hangover.

The question is, how

long will it sober up?

- Wall Street is bracing

for another possible victim

of the housing

and credit crisis.

Lehman Brothers,

one of the largest

and oldest brokerage firms

in the country

has been experiencing

what many fear is a slow death

because of the demise

of its rival,

Bear Stearns, back in April.

- There had been rumblings

that if Bear went down

Lehman would be

in severe trouble,

and Dick Fuld,

their CEO,

had been warned

that you may be next.

- Hank Paulson, who knew

him from his Goldman days,

had sat down with him

and said,

"You might want to think

of finding a partner.

Somebody to take you over.

Get somebody

with a bigger balance sheet."

And Fuld had famously dismissed

those as absurd

and completely unnecessary.

- Wall Street

is on edge tonight

after a weekend of talks

ended rescuing

the struggling Lehman Brothers

investment bank.

- All weekend top executives

of rival banks

along with Federal Reserve

and Treasury Department

officials

met under tight security

to discuss plans to buy Lehman

whole or in parts.

- Lehman is on the ropes.

Every CEO of virtually all

the big banks

gets a phone call.

"Get down

to the Federal Reserve."

Hank Paulson had

been lambasted

for effectively bailing out

Bear Stearns,

and so he sat all of these

CEOs in a room

and said,

"It's your problem. Fix it."

- Pretty clear

the government is not

going to bail anyone else out.

At least that's the message

they're sending.

- More than clear.

Loud and clear.

In fact,

when I was talking

to folks at the treasury

on Friday they were saying,

"Look, we're trying

to "find a buyer here,

but let's be clear.

We are not going

to use taxpayer money."

- People believed

that if Lehman went under

then the panic might spread,

but people

were equally worried that

if they bailed Lehman out

that it would be obviating

this idea of moral hazard.

If you believe

the U.S. government

is always gonna bail you out

well, then why wouldn't you

make bad decisions?

- The government is trying

to restore confidence

in the markets,

and you don't

restore confidence

by rescuing one institution

after another,

after another, after another.

- That Friday,

when Secretary Paulson and I

brought the market together

at the New York Fed.

I don't think any of them,

and really any of us

realized how bad

it was gonna get still.

I think we were,

I would say terrified

at that point, but probably

not terrified enough.

- Lehman Brothers,

for 158 years

a cornerstone on Wall Street.

Failure to find

a buyer over the weekend

means it is now bankrupt.

- Meanwhile, Merrill Lynch,

fearing it could be next

agreed in an act

of desperation

to a shotgun marriage

with Bank of America.

- Now we're left

with Morgan Stanley

and Goldman Sachs.

Out of five, three months ago,

there are two left.

- How long have you worked

for Lehman, sir?

- When they declared bankruptcy

I cannot explain to you

the shock and awe

in the investment community.

- If Lehman can go down

what does that mean

about the health

of the American financial

system right now?

- You're talking about

investment banks.

These are the smartest money

on Wall Street.

How have they been

getting it wrong for so long?

- They say on Wall Street

that nothing happens

until the lines

of fear and greed cross,

and there's no better example

of the lines

of fear and greed crossing

then the Lehman bankruptcy

on September 15th, 2008.

The markets were fearful.

[bell ringing]

- Your future, my future,

our future at stake.

A meltdown on Wall Street,

the worst since 9/11.

- This is

a once-in-a-half-century,

probably once-in-a-century

type of event.

- Is it the worst you've ever

seen in your career?

- Oh, by far.

- Because he's let Lehman

go under

there's suddenly shock

in the financial world

that Morgan Stanley's

gonna go under

and Goldman Sachs is gonna go

under and now you've got panic.

- The American people

can remain confident

in the soundness

and the resilience

of our financial system.

- Nobody understood

what was happening.

They couldn't believe

that these grand institutions

were about to come undone.

And they were waking up

in the morning

and finding out

it was worse today

than it was the day before.

- It's the latest crisis

to rock the financial markets.

Insurance giant AIG teetering

on the brink of bankruptcy.

This is a colossal firm.

If it fails,

the ripples would travel

far and wide

throughout the global economy.

- All of a sudden,

who would have dreamt

this other bombshell goes off,

which is AIG.

And if you think

Lehman Brothers

was complicated to figure out,

AIG was monumentally bigger.

- AIG is this massive

insurance company,

but they also had a division

called AIG Financial Products.

Which would offer something

called a credit default swap.

- A credit default swap

is a contract

between two people,

one of whom is

giving insurance to the other

that he will be paid

in the event

that a financial institution

or a financial instrument

fails.

- So it is

an insurance contract?

- It is an insurance contract

but they've been very careful

not to call it that.

Because if it were insurance

it would be regulated.

- AIG essentially facilitated

the creation

of a lot of these

mortgage securities

by essentially providing

an insurance policy

should they go bad.

But because the derivatives

market had been deregulated

AIG could do this

without any requirement

to put up any reserves.

It's like an insurance

company selling you

a life insurance policy

and not having any money

when the time came to pay off.

And the time came to pay off.

- After its credit rating

was downgraded over night

AIG must raise at least

$40 billion and fast.

- You had a full-scale run

on AIG.

And there was a real view,

by the way,

that if AIG went under

the game was over.

- AIG does business with every

major financial institution

and in 130 countries.

- AIG will destroy much

of the capital

formation process

in the Western world.

- Paulson, Bernanke,

Tim Geithner,

they saw the risk

that this could be

not just a fire that would

burn Wall Street down,

but that could burn down

our economy

and burn down

the world economy.

- It is Uncle Sam

to the rescue,

but, oh, what a price tag.

- The federal government

is saving insurance giant AIG

from possible collapse

with an $85 billion loan.

All of it your money.

- The move was designed

to calm and bring stability

to the financial markets.

Did it work?

Maybe down the road,

but not today.

- Another anxiety attack

on Wall Street

even after the AIG bailout.

The DOW tumbled

another 450 points.

- In your 30 years of

being down here have you ever

seen the market like this?

- No. Never.

- Hank Paulson

and Ben Bernanke

are working very hard,

but it doesn't feel like

they're in control.

And that is very,

very unsettling.

- The $85 billion

the Federal Reserve put up

to save AIG

from near certain bankruptcy

was not enough

to calm terrified investors

that the next disaster

is not around the corner.

- Banks, meanwhile,

are hoarding cash

reluctant even

to lend to each other.

- Banks are nervous

about giving loans

for appliances, cars, homes,

making Wall Street's troubles

a Main Street issue,

and potentially putting

economic recovery

even farther out of reach.

- The markets are freezing.

The whole American economy

is built on the ability

to lend and borrow

and to invest.

And all of a sudden companies

throughout the country

who borrow because

they're buying equipment,

they need to make payroll,

they can't borrow.

Millions of people

started losing their jobs.

- The economy is shaken

and we're close

to a depression.

Forget the recession.

- It wasn't just a lost job.

It was a lost job

and am I going to have

a bank to go to

to get my retirement from?

Where am I gonna deposit

a check?

I mean, Ben Bernanke

and Hank Paulson

were really concerned

about whether or not

people would be able

to go to an ATM.

- Treasury Secretary Paulson

told Congress

in a sobering meeting

last night

that a bailout is the only way

to prevent a collapse.

- America's economy is facing

unprecedented challenges,

and we're responding

with unprecedented action.

- It is no stretch

to say that after this week

the era of big government

is back.

- It is an urgent request

from the Bush Administration

to Congress for $700 billion

to quickly stabilize

the financial system.

- Thursday afternoon

we start to hear

about this thing called TARP.

And TARP had many

different variations,

what it was gonna be,

but basically they were

gonna infuse capital

directly into some

of these companies.

- This troubled asset

relief program

must be properly designed

and sufficiently large

to have maximum impact

while including features

to protect the taxpayer

to the maximum extent possible.

- That $700 billion projected

price tag isn't pretty,

but the president says

it's a big package

because it is a big problem.

- My first instinct

was to let the market work

until I realized that--

from being briefed

by the experts

of how significant

this problem became.

And so I decided to act

and act boldly.

- George W. Bush understands

that he has

to put his ideology aside.

Put 30 years

of small government,

no taxes, small budget, aside

because the country needs it

and the economy needs it.

- Opposition seems to be

growing here in Congress

for the legislation

that could be

the most important

of Mr. Bush's presidency.

- This isn't legislation.

This is extortion.

- This is a huge cow patty

with a piece of marshmallow

stuck in the middle of it.

- Please. Please don't betray

this nation's great history.

- We are the working majority!

- We will not be ruled

by the rich minority.

- Main Street went

to Wall Street today

to protest the bailout plan.

- People said, "Well,

why give the banks money?

"We could give money

to homeowners

to pay off their mortgage.

Is it fair that a company

that should be going bankrupt

is getting a handout?

- If this package goes

through, the way I look at it,

they've just mortgaged

our future.

- They live by

the free market.

Let them die by

the free market.

- There were a lot of people

shouting, "Let them fail."

They got themselves

into this position

and it's survival

of the fittest.

And this is what capitalism

looks like.

- The last thing in the world

I wanted to do

was be going up

to Congress asking

for these kinds of things.

It is a terrible position

to be in.

The only thing worse

is the alternative.

- If the credit markets

are not functioning

jobs will be lost, more houses

will be foreclosed upon,

the economy will just

not be able to recover

no matter

what other policies are taken.

- I know that we will be

able to live up

to our side of the bargain.

I hope the Republicans

will too.

- We gotta vote.

Thank you very much.

- Good day, and

what a day it's been so far.

The president's financial

bailout plan

has suffered a major defeat.

- They go up to Capitol Hill

and the bill fails.

And the results are dramatic.

- We gotta go!

- What is it?

What's wrong?

- Wall Street watched

Washington

with shock and fear.

As the bailout package

went down on Capitol Hill

the DOW went down like a sub.

- This is the biggest point

drop that has ever been seen.

There's virtually no American

who is not feeling this

one way or another.

- They just wiped out

everybody's 401k.

- There's just pure disgust

with the politicians.

There's absolutely

zero confidence

with what's going on here.

None.

- Paulson called me that night

stunned and scared.

People were days away

from not being able

to take money

out of their ATMs.

And it was happening

around the world,

not just in the United States.

It was a more dangerous

global crisis and scope

than anything we'd seen

since the Great Depression.

And we were effectively

out of ammunition.

- Two days after

the House killed

the financial rescue package

the Senate leadership is

determined to pass it tonight

and pressure the House

into taking action.

- To Democrats and Republicans

who've opposed this plan

I say step up to the plate.

Let's do what's right

for the country at this time.

Because the time to act is now.

- If we fail to act.

The gears of our economy

will grind to a halt.

- This is the greatest

market disruption

that's happened since

the crash of 1929.

Reality finally imposes itself

on Capitol Hill.

- The motion is adopted.

- Given a second chance,

the House did an about-face.

Easily passing

the $700 billion bailout

of the financial industry.

There were moments this week

when some thought

that the federal government

could not rise

to the challenge,

but thanks to the hard work

of members

of both parties

in both houses

in the spirit of cooperation

between Capitol Hill

and my administration,

we completed this bill

in a timely manner.

- In the aftermath,

people criticized Paulson

for this and the other,

and that's fine.

But the truth is

if he hadn't been there

and they hadn't intervened

we never would have

crawled out of that hole.

- They rescued

the financial system.

Like it or not.

I mean,

you can wish all day long

that they'd all gone down

the tubes,

but I really don't think

we would have enjoyed that

one bit.

- Our so-called ownership

society

just didn't make the break,

but at least we saved those

Wall Street banks.

[indistinct chatter]

- Get 'em boys!

Get' em.

- Bernie, give me one minute.

- What do you have to say

to the public?

To your investors?

- There are

new details tonight

about what may be

the largest swindle

in Wall Street history.

An alleged $50 billion

Ponzi scheme by former Nasdaq

chairman, Bernard Madoff.

- What would you say to all

those people that lost money?

What would you say to them?

- When you have a collapse

on Wall Street

I always think of it

as the water

going out of a lake

or something.

And suddenly you can see

the roots of those trees.

You can see all the ugly stuff

that gets caught in them.

Including, like, dead bodies.

And that's how I feel, like,

that the water went down

so much

and everybody was like,

"That's Bernie Madoff

down there."

- A Wall Street whiz

with a golden reputation,

Bernie Madoff earned trust

from many of his clients

because he made them money,

lots of it.

Or so they thought.

- Bernie Madoff

was a modern day

Dr. Jekyll and Mr. Hyde.

He had a legitimate life

that was highly successful,

and he had this darker secret

that fed his need for success.

- Madoff allegedly had been

using new investment money

from clients

to pay supposed profits

out to other investors.

Under the weight

of a tumbling stock market

the scheme had collapsed.

Desperate investors

and their lawyers

scrambled to Madoff's

East Side offices Friday

looking for their money.

They were turned away

in the lobby.

- There has never been

a Ponzi scheme

on the scale of Madoff ever.

We're talking

thousands of people

who thought that

they had millions of dollars

socked away for retirement

suddenly found out it was gone.

- Rose and Jack Lass

say they invested

every penny of their savings

with Madoff.

- We started

to sell our furniture,

some of our things

that we value,

so that we should have some

money immediately.

- Then there's 91-year-old

Ian Fearman.

He had to take a job

at a grocery store

after losing $700,000

to Madoff.

- The human suffering

that Madoff caused,

I don't think

we can ever fully grasp.

- Homes had to be sold,

college educations truncated,

people had to come out

of retirement,

go to work at whatever job

they could get.

And, for those people,

the Madoff fraud

is never gonna be over.

- What may very well be

the final steps of freedom

for perhaps the most

despised man in America.

Bernie Madoff entered

a federal court

in Manhattan today

and pleaded guilty

to the greatest investor fraud

in U.S. history.

- I think the connection

between Bernie Madoff and

the financial crisis

was one fundamentally about

trust.

It was about a loss of trust

in the system.

About a loss of trust

in people that

you thought were worthy.

- We all trusted

the free enterprise system.

We trusted these

deregulated markets

to foster our prosperity.

All of America felt

that they had been betrayed

by Wall Street.

- The stock market just

can't seem to find a bottom.

- It's day after day,

week after week,

and it's hurting

the public morale.

- There is a deep sense

across the country

that those who were not

responsible for this crisis

are bearing a greater burden

than those who were.

The scariest thing

about that time

was that the United Sates

had already thrown

a lot at this problem,

and the recession

was getting much worse.

We were losing 750,000 jobs

a month.

- Just this weekend there was

a job fair at Dodger Stadium.

500 jobs available for ushers,

food workers,

security, 9 to $18 an hour.

Part-time, 500 jobs.

4,500 showed up.

- [crying]

It's a lot of competition.

I'm 55 years old

trying to get a job.

It's heart-breaking.

- Millions of people

lost their jobs.

Millions lost their homes.

Cities and towns

were devastated.

And on the other hand

Wall Street survived.

Quite nicely, I might add.

- After they got

their $84 million bailout,

AIG executives spent hundreds

of thousands of dollars

on fancy hotels

and spa treatments.

- They were getting

their manicures

their facials,

their pedicures,

and their massages

while American people

were footing the bill.

- Your company's now bankrupt,

our economy is

in a state of crisis,

but you get to keep

$480 million.

- It's been a continuing

source of frustration

that essentially no one

at the big banks

was ever prosecuted

or held accountable for this.

- I do not think

that we did anything wrong.

We did not cause

the financial crisis.

- There were a lot of people

who made a lot of mistakes.

The question is whether

they were criminal mistakes.

It was hard to make the case.

- You belong in jail!

- You belong in jail, you...

both: Criminal!

- You should go to jail!

- There's just part of us

that wants justice.

And sometimes justice is not

what you should be asking for.

You should sometimes

just realize

a system's broken

and needs to be fixed.

That said,

Wall Street never changes.

- There's always gonna be

people out there

who are paid

to try to find the loophole.

Or if there's a regulation,

to try to roll back

the regulation.

It never ends.

It never will end.

[protestors chanting]

- And that's why Wall Street

has always been

a very dangerous place.

And it remains

a very dangerous place.

There's plenty of reasons

why the same thing

could happen again

in the near-term.

- $10.

We can boogaloo,

we can barbecue,

but you won't get burned

on Wall Street.

$10, $10, right here.

- The results of a new survey

from "CBS News"

and "The New York Times"

revealed the financial hardship

is taking a psychological toll

on families,

but there's

one silver-lining

in an otherwise

heart-breaking report.

The challenge has

motivated people

to learn new skills and

more than half are confident

their next job will be

as good as their last.

Though the American Dream has

evaporated for some families,

at least for now,

American optimism

has proved to be

a renewable resource

and perhaps

the most important tool

on the road to our recovery.