Too Big to Fail - Andrew Ross Sorkin [241]
“This is only going to work if you scare the shit out of them.”
That had been Jim Wilkinson’s advice to Paulson before he and Bernanke left to meet with the congressional leadership at Nancy Pelosi’s office that evening. By Wilkinson’s reckoning, unless they could convince Congress that the world was literally going to come to an end, they would never receive approval for a $500 billion bailout package for Wall Street. Republicans would complain it was socialism; Democrats would carp about rescuing white-collar fat cats.
At a burled wood table just off Pelosi’s office, two dozen congressmen gathered to meet with Paulson, Bernanke, and Christopher Cox, who had been invited more as a courtesy than anything else.
Pelosi began the meeting by welcoming them and thanking them for coming “on such short notice.”
Bernanke, who was known never to exaggerate, began by saying gravely, “I spent my career as an academic studying great depressions. I can tell you from history that if we don’t act in a big way, you can expect another great depression, and this time it is going to be far, far worse.”
Senator Charles Schumer, sitting at the end of the table, noticeably gulped.
Paulson, with a deep sense of intensity, went on to explain the mechanics of his proposal: The government would buy the toxic assets to get them off of the banks’ books, which, in turn, would raise the value of the assets by establishing a price and make the banks healthier, which in turn would help the economy and, as Paulson repeatedly said, “help Main Street.”
Barney Frank, sitting next to Bernanke, thought Paulson’s reference to “Main Street” was a disingenuous ploy to line the pockets of Wall Street, and provided no direct help for average Americans saddled with mortgages they can’t afford, foisted on them by the big banks being rescued. “What about the home owner?” he asked. “You aren’t selling this plan to a Wall Street boardroom,” he said derisively. “That’s right,” Christopher Dodd chimed in. Richard Shelby disapprovingly characterized the proposed program as a “blank check.”
Paulson said he understood their concerns. But he continued to play his “scare the shit out of them” card, insisting that it was absolutely necessary: “I don’t want to think about what will happen if we don’t do this.” He said he hoped that Congress could pass the legislation within days and promised to get a full proposal to them literally within hours.
“If it doesn’t pass, then heaven help us all,” Paulson said.
Harry Reid, sitting across from Bernanke, looked at Paulson with a sense of bemusement about the prospect that Congress would pass a bill of this magnitude that quickly. “Do you know what you are asking me to do?” he said. “It takes me forty-eight hours to get the Republicans to agree to flush the toilets around here.”
“Harry,” Mitch McConnell (R-Kentucky), who was deeply frightened by Paulson and Bernanke’s presentation, interjected, “I think we need to do this, we should try to do this, and we can do this.”
John Mack was still at his office in Times Square when Tom Nides, his chief of staff, told him the good news: His sources at the SEC had confirmed that the agency was preparing to finally put in place a ban on shorting financial stocks, affecting some 799 different companies. The measure would likely be announced the following morning.
Rumors of the pending action were already moving on the wires. James Chanos, perhaps the best-known of the short-sellers, who had pulled his money from Morgan Stanley because of Mack’s support for the ban, was already on the warpath. “While