MEMORIES, JOHN RECORDS

LANDECKER IS HERE

BUT

FIRST, IS

THE U.S. ECONOMY IMMUNE TO A

CRASH LIKE THE ONE FIVE YEARS

AGO?

THAT WAS THE

MAIN QUESTION AT A

CONFERENCE TODAY THAT BROUGHT

TOGETHER MONEY OF THE KEY

PLAYERS FROM THAT

CRISIS.

PARIS SHUTZ SAT DOWN FOR

A RARE

INTERVIEW WITH ONE OF THE

CENTRAL FIGURES FROM THAT

TIME,

FORMER U.S. TREASURY HENRY

PAULSON WHOSE

DECISIONS HAVE

HAD

REPER CUSHIONS.

>> LET'S REMEMBER BACK TO 2008,

THIS WAS THE REAL

ESTATE BUBBLE

THAT HAD BURST, THE

FINANCIAL

MARKETS HAD

CRASHED, LEHMAN

BROTHERS WANT BANKRUPT AND

THERE'S A FEDERAL

TAKE-OF OF

FANIE MAY AND

ENTER HENRY

PAULSON, THE

ARCHITECT

OF THE

BANK

BAILOUT.

THERE

WAS $85 BILLION

TO

THE

INSURANCE GIANT AIG AND U

P

TO

$700 BILLION TO BE DOLED TOUT TO

OTHER BANKS.

NOW,

PAULSON

SAID IF WE DIDN'T

DO THAT WE

FACED A

WORLD-WIDE

VERIFY.

FAST FARRED TODAY, MOST

OF THE TARP MONEY HAS BEEN PAID

BACK AND WE'VE HAD THINGS LIKE

THE OBAMA

STIMULUS,

PLEX OF THE

DODD FRANK

REGULATORY FINANCIAL

REGULATORY

LAWS, AUTO INDUSTRY

BAIL-OUT, THE FEDERAL RESERVE

STIMULUS BUT A

WEAK ECONOMIC

RECOVERY.

SO I ASKED THE SECRETARY WHAT

WORRIES HIM THE

MOST ABOUT THE

CURRENT STATE OF THE

ECONOMY.

>> WE HAVEN'T

FIXED FANIE

MAY

AND FREDDIE Mc.

FREDDIEMAC.

THIS WAS A KINGLE MOST IMPORTANT

THING WE DID.

CAN YOU JUST IMAGINE

WHERE

HOUSING PRICES WOULD HAVE GONE

IF WE DIDN'T HAVE MORTGAGE

FUNDING AVAILABLE?

BUT THAT WAS SUPPOSED TO BE

A

TIME-OUT.

BUT FIVE YEARS

AFTER, WE

HAVEN'T

FIXED IT AND WE STILL

HAVE THE

GOVERNMENT RESPONSIBLE

FOR

GUARANTEEING

ALMOST 90% OF

RESIDENTIAL

MORTGAGES.

SO WE'RE WILLING TO SEIZE FUTURE

PROBLEMS.

I HAVE CONCERNS THAT STILL

HAVE

NOT BEEN DONE IF SHADOW

BANKING

MARKETS, TO FIX

MONEY MARKET

FUNDS?

WE HAVE THE

POWERS THAT WERE

ESSENTIAL, POWERS WE

NEEDED.

BUT THE MAJOR PROBLEM WE STILL

HAVE IS

WE HAVE

FIVE

REGULATORS

COMPETING WITH EACH OTHER AND

I

THINK THAT'S

COUNTERPRODUCTIVE

COMMISSION AND SO MUCH OF DODD

FRANK HASN'T BEEN

PLEASANTED

YET.

>> PAULSON IS THE HEAD OF

THE

PAULSON INSTITUTE AT THE

UNIVERSITY OF CHICAGO, A

FULL-TIME CHICAGO RESIDENT AND

TODAY'S CONFERENCE

WAS PUT ON

BY

HE AND DAVID

AXELROD, AND IT

FEATURED THE TWO OF THEM AND

OTHER MAJOR PLAYERS FROM THE

CRISIS, LIKE

FORMER CONGRESSMAN

BARN

Y FRANK,

FORMER SENATOR

CHRIS DODD,

LARRY OFFICERS AND

MAYOR EMANUEL WHO, OF COURSE,

SERVED IN CONGRESS AND THEN AS

OBAMA'S CHIEF OF STAFF

DURING

THE RECOVERY.

PARIS, THINKING BACK, THERE

WAS

SO MUCH CONTROVERSY OVER THE

DECISION TO BAIL OUT OF

BANKS.

HOW DOES PAULSON

REACT TO

THE

BACKLASH THAT THAT CREATED?

>> WE SAID THAT

WAS THE

AMBITIOUSEST SHOCK TO HIM.

HE WAS SHOCKED BY HOW

ANGERED

THE AMERICAN PEOPLE WERE OVER

THE BANK BAIL-OUTS AND

REGRETS

NOT

COMMUNICATING THAT IT

WAS

ABOUT

BAILING OUT

MAIN STREET

NOT WALL STREET.

YOU BRING UP

THE

STOCKMARKET

THAT CLOSED THE A RECORD

HIGH.

SO MANY PEOPLE ON

MAIN STREET

MIGHT QUESTION THAT LOGIC YOU

BUT I ASKED PAULSON TO

GIVE HIM

A GLIMPSE

INTO HIS

DECISION-MAKES AND HOW DIFFICULT

IT WAS TO GET

CONGRESS TO

AUTHORITIES SOMETHING SO

UNPOPULAR.

>> WHEN I WENT UP T

O THE HILL

WITH

BENEFIT

BERNANKE

IN

SEPTEMBER OF 2008, I SAID TO

THEM, THE FINANCIAL SYSTEM

IS

FROZEN.

CREDIT ISN'T FLOWING.

THE ECONOMY WILL BE

TURNING

DOWN, NO MATTER WHAT

WE DO IN A

COUPLE OF AMONGS BUT IF WE

DON'T

GET THESE POWERS THERE WILL BE A

CATASTROPHE.

WHAT BARNEY FRANK SAID AT THE

TIME IS THIS IS A

DIFFICULT,

POLITICAL VOTE.

YOU'LL

NEVER GET CREDIT,

VOTERS

WILL NEFF GIVE US CREDIT FOR

PREVENTING A CATASTROPHE THEY

DIDN'T

SEE AND MAYOR EMANUEL

WHO

SPOKE TODAY SAID YOU'VE GOT YOUR

MARKET, WE'VE GOT

OURS.

AND THE ONE HAND, YOU DON'T WANT

TO

COMMUNICATE ABOUT HOW SERIOUS

THE PROBLEM IS BECAUSE YOU DON'T

WANT

TO INDUCE A GREATER

PANIC.

ON THE OTHER

HAND, FOR OUR

VOTERS, IN CONGRESS, TO GIVE YOU

THE

AUTHORITIES YOU NEED,

THEY'RE GOING TO HAVE TO BE

CONVINCED.

SO IT WAS A TOUGH

COMMUNICATION

CHALLENGE.

BUT I'M VERY

PLEASED THAT BOTH

SIDES

CAME TOGETHER

AND STRONG

BIPARTISAN SUPPORT.

>> BE SURE TO GO TO THE WEBSITE

FOR THE FULL

UNEDITED

INTERVIEW

WITH TREASURY SECRETARY

HENRY

PAUL SANTA MONICA.

I ASKED HIM ABOUT HIS REACTION

TO MOVEMENTS LIKE THE TEA PARTY

AND THE OCCUPIED MOVEMENT WHO

GREW OUT OF THE

THIS FASCIAL

CRISIS AND PARTIALLY IN RESPONSE

TO A LOT OF THE

DECISIONS THAT

HE MADE.

I ASKED HIM,

GIVEN WHAT HE

LEARNED IN THE WAKE OF

THIS

CRISIS

ABOUT SUBPRIME MORTGAGES

AND

CREDIT DEFAULT

SLOTS H

OW WAS

IT NO ONE CAUGHT THIS

SOONER.

THAT'S ON OUR WEBSITE,

WTTW.COM/"CHICAGO

TONIGHT"TONIGHT.

>> AFTER THE BREAK WE MEET THE

NEW