Hank Paulson presents TARP to the big banks – Too Big to Fail (2011)

we are of the view that the United

States needs to take strong decisive

action to arrest the stress in our

financial system through our new tarped

Authority Treasury will purchase

preferred stock in each of the banks

represented in this room that stock will

yield five percent the first five years

nine percent after that we give you

money you lend it out your bull unfreeze

credit stabilize the banks restore

confidence everyone will be better off

with more capital in the system and that

is why all nine of you will participate

in the program

some of us don't need any capital you

all need capital you have no idea what

the markets gonna look like in here

neither do you

I'm not one of you New York guys with

your fancy products well why am i in

this room talking about bailing you out

the stronger banks will serve as cover

for the weaker banks if just some of you

take it the money is a signal that a

bank is too weak to survive the market

will devour how much are we talking

about 125 billion Bank of America 15

billion Bank of New York Mellon 3

billion Citigroup 25 billion Goldman

Sachs 10 billion JPMorgan 25 billion

Merrill Lynch 10 billion Morgan Stanley

10 billion State Street 2 billion Wells

Fargo 25 million what happened to buying

toxic assets wasn't that the idea it's

too slow they'll be dead before we

sorted out so we're just handing the

reins over to you

deals actually pretty good you turn your

nose up at this now and we have to

rescue later the terms won't be nearly

as attractive it's cheap capital it's

not the worst idea in the world it is

for those of us who already have capital

we will be non-voting shareholders this

will be a temporary measure what if we

declined to be involved the chairman of

the FDIC is sitting right there tomorrow

you'll find out you're not as well

capitalized as you think you are what

kind of protections can you offer on

changes for compensation policy I mean

if the government is going to become a

part owner does that mean that the

government is going to dictate

compensation yes give me about your

bonus right now John I'm running a

company if the Fed tells me I can't

offer a competitive pay for talent

you're gonna launch the biggest brain

drain this country's ever seen is that

the way you want to run the bank's until

the money is repaid to the Treasury

there will be some limitations on

deductions and golden parachutes well

there you go I don't really understand

why there needs to be so much tension

about this the country is facing the

worst economy since the Great Depression

if the financial system collapses it

will take every one of you down

give me the papers

you can't just sign no no not without

your boards my boards on 24-hour notice

I think they'll go along with it and if

they don't they'll fire me

anyone else