Q&A | 11/17/2009 5:00 pm

Andrew Ross Sorkin – Blame and Rewarding Failure: The Lesley Stahl Interview (Audio/Transcript)

The bestselling author of Too Big to Fail reveals the most shocking moments in the economic crisis, responds to critics and looks to our financial fate.

By Lesley Stahl

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Image © Brent Murray

Editor’s Note: Andrew Ross Sorkin is a New York Times financial columnist, the editor of Dealbook, a popular financial blog, and most recently, the author of Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System – And Themselves. The book, which details the fall of Lehman Brothers and the subsequent government bailouts, debuted at No. 4 on the New York Times bestseller list. Click here to listen to the audio interview in its entirety.

LESLEY: Andrew, let me ask you straightaway about what you learned in writing this impressive book. You interviewed virtually every major player on Wall Street and in the government crisis. How big of a mistake was it that Washington let Lehman Brothers fail?

ANDREW: I think it was a huge mistake. Not a mistake in that Lehman somehow deserved to be saved; rather, that they needed to be saved simply to save the rest of us – meaning the rest of the system. I think that mistake of letting them go did exacerbate and almost create, in some way, this sort of cataclysmic crisis that we had in September of 2008 that led to all of these bailouts.

I have been baffled, as I suspect most of the country has been, that a year after the crisis, we have done very, very little.

LESLEY: Well, who should we blame? Should we blame Henry Paulson, who was the Treasury Secretary, but who – and I learned this from your book – did not play all the cards he had? Or Dick Fuld, the head of Lehman, who, as you portray him, almost became delusional as this crisis and the pressure built?

ANDREW: I think there’s a lot of blame to go around, and both of those gentlemen obviously made some very bad decisions, especially as things got to that fateful weekend in September. Clearly, a lot of blame has to be pointed at Lehman Brothers; a lot. These guys bet and spent money and invested in real estate. It’s not something you’d think a bank would do, and they were taking on risks that they never should have taken. At the same time, there are the regulators who were supposed to be minding the store. Hank Paulson and others in power were trying to save Lehman in their own way. But as you get to that moment where things go very, very wrong in September, I think there’s almost an element of frustration, where they’re almost throwing their hands up in the air, thinking, "We’ve tried and tried to push Fuld and the company to do a deal." And then you get to this moment where I think they just say, "You know what? Enough is enough."

LESLEY: Well, I’m going to ask you a little more about the moment when they threw up their hands. But first, tell us about your lead character. I know my husband doesn’t agree with me, so your book is read in different ways — but for me, Henry Paulson comes off as a real hero.

ANDREW: Well, that’s interesting … go ahead.

LESLEY: I say that because there were cascading crises. There was Bear Stearns, then Lehman Brothers, then AIG, and Citi, and even Goldman Sachs. And this guy is so earnest. He just keeps trying to solve it. And I felt he was doing the right thing — at least the way you portray it.

ANDREW: I think that’s right in that I do think Paulson is always trying to do the right thing. I don’t think he’s trying to do anything untoward. You said you have one perspective and your husband has another. That’s actually a perfect answer for me. I’ve had people come up to me on the street and say, "Dick Fuld is a villain. I got very angry and frustrated and upset with him." And then I had a woman come up to me who said, "You know, there’s a scene after Lehman goes bankrupt where Dick Fuld goes home and he’s crying with his wife, and I cried with him, and I felt so bad for him," and I thought, "Ah. Perfect."

10 Reader Comments (so far…) Sign In or Register to comment

Andrew Ross Sorkin is a very smart young man. I’m going to order his book today! He’s very thoughtful and speaks well. Charlie Rose has had him on many times, and I’ve always understood what he’s saying, which is more than I can say for some others. Maybe it’s just me.

By PatriceBaldwin on 11/17/2009 4:48 pm

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Great interview! I am looking forward to reading this book! I have heard nothing but praise about it.

As for this quote, …

ANDREW: Part of me thinks maybe the president was aware that he didn’t understand what was going on, because he thought, "I should just hand over the reins." Maybe it was he felt that comfortable with Paulson."

I recall that while this meltdown was occurring and the country was gripped in disbelief someone asked the President what was going to happen. GWB shrugged and answered, " Dunno. Ask Hank." I can only imagine the pressure on Henry Paulson like he had never known before. He truly seemed to be the last man standing. As for Dick Fuld, his tears meant less than nothing. What a skunk!

How nice if we could, for a much needed change ,have financial columists like Andrew Ross Sorkin on Fridays.

By MaggieW on 11/17/2009 4:57 pm

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Congratulations to Wow for giving us a stellar interview!!! Sorkin––and he’s so young and so cute–––has been in the fore front on financial matters for some time. Something has to give in this country–-finally! But those that have it are not going to want to let go and we will probably have another decade of the haves and haves not until the center cannot not hold and we find ourselves in a worse quagmire than we have now. America was once considered an Empire––we need to scale that down to just a damn good country.

By phyllisDoylePepe on 11/17/2009 5:14 pm

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I have already purchased the book. For those of you who will be looking for a reason to blame George W. Bush for the economic meltdown, then this is not the book to prove your case. In fact, Mr. Sorkin is rather gentle with the President though he writes that GWB once told Paulson that when all of this over, he will have to explain to him why it happened. The President was not aware of the reasons that if Lehman fell, then the entire financial industry was at risk.

As a result, the President elected to have Paulson, Bernanke and Geither take the lead and did not hamper their efforts in any way. And they tried very hard.

However, as Mr. Sorkin also writes, that by the time GWB came into office, there was little that could be done to stop the inevitable crash. The real estate market had for more than a decade been absorbing those toxic sub-prime housing loans and the bubble was soon to burst. The only hope was to keep the fallout from the housing market spreading to the financial markets but that, too, was impossible. Lehman Bros. was saturated with those toxic loans and could not be saved. Dick Fuld refused a takeover bid that halved the current market price of the stock, but even if he accepted the takeover, there is no certainty that the company could have been saved.

Mr. Sorkin says there is blame to be shared by everyone. But the proponents of those God awful real estate loans were the major culprits. And some of the sadness about all of this woe, is that there has been very little done, regulatory wise, to prevent another crash. The banks are no longer holding $1 in assets per $40 investment but that is only voluntary …. no regulations have been passed by this Congress.

Finally, any heroes here? None but that is not to forsake the fact that members of the former administration and some members of Congress and private individuals tried very hard to prevent the crash. There were others who just stood and watched…..those who initiated and administered those easy and toxic housing loans in the 1990s.

By BonnieO on 11/17/2009 5:22 pm

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last sentence should be ……. "those who initiated and administered those easy and toxic housing loans that began in the 1990s.

By BonnieO on 11/17/2009 5:26 pm

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Who shall I thank? I stopped thinking about the economy when I saw this pretty picture. And his astuteness is such a turn on. When I saw him on Charlie Rose with his full lips and dreamy yet focused eyes, my cognitive reasoning stagnated. And women who aren’t normally interested in economic issues or debate, perhaps Sorkin could stimulate an interest—of sorts.

By AnnieT on 11/17/2009 6:31 pm

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I agree with my fellow bloggers, Sorkin is a hottie. He has the brains and good looks….the perfect package. To bad he’s not 30 years older, I’d feel like a pervert lusting after him now. :-)

His book and interpretation of the melt down is dead on. I agree 98% of what he has written. There is blame to go around all over the place in terms of what and who caused this financial debacle. And I personally think it is very important to know who the players were so that they are not allowed to repeat it.

We are in really dire straits right now, but oh my, it could have been so much worse. What I really like about Andrew is he speaks clearly -simply. I understand economics when I read his writings or hear his interviews. He makes it clear. To many who say they are a financial analyst (such as one associated with this site) are partisan and speak from their side of the court. Andrew speaks about the issue at hand and what is happening.

He brings to the subject of finances what my favorite reporter Tim Russert brought to political reporting….just the facts. How refreshing.

By BelindaJoy on 11/17/2009 7:33 pm

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Mr. Sorkin is right on……….Rewarding failure. Who benefits from this? Not hard working/ tax paying Americans that’s for sure. The other point he brought up is "fences". We as Americans have a voice and that voice should be raised up in a non-partisan manner that we aren’t going to take it anymore !! I have also wondered how this is going to play into the concept of a one world currency, you know the New World Order. These ‘money-men’ with their elite club of only 30 such members have too much power. That GWB didn’t understand the scope of this is understandable. I don’t applaud him for much but I will applaud him that he admitted that this was over his head and handed the responsibility to someone who did understand and tried to make a difference.

The one thing I never understood is how AIG took all that bail-out money and then sent their executives on some lavish trip and nothing was done about it. I read somewhere that AIG is partly owned by the Saudi’s. Can anyone tell me if THAT is true? I also don’t get the concept of bonuses. You are paid for doing your job, why do you get bonuses on top of that? I don’t get a bonus check for every life I save in my profession. EMT’s don’t get bonuses, neither do firemen or policemen or our men and women in the armed forces who protect our country. What the banks have successfully done is to take taxpayer money, deny loans, raise credit card interest rates to loan-sharking levels and put middle class America in the perpetual poor-house. But that’s been the master plan all along and we all bought into it. I am not by any means a financial wizard, I work and pay my bills. I can balance a checkbook. But I’m not stupid and I know when I’ve been screwed. This raping of America has to be stopped.

By DawnSmith on 11/17/2009 9:58 pm