During our interview with Maria Bartiromo, she recounts the events that led to the Wall Street collapse. As we approach a new year, let’s not forget the circumstances that rocked our financial world. Watch:
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The Weekend That Changed Wall Street is a book that I’ve been wanting to write since that fateful weekend of September 15, 2008 when Lehman Brothers ultimately declared bankruptcy. Merrill Lynch was sold to Bank of America, and the government took 80 percent of AIG. It was a fateful weekend because it did dictate what happened in the next year and a half, two years, and that’s what I write about.
I start in the heydays of 2006 with private equity. When Steve Schwarzman, the head of Blackstone Group, told me, oh, we could do a $40-billion deal over night, and we don’t have any covenants … The glamorous parties that he had … Life was good in private equity. Life was good on Wall Street in 2006.
Then I move into 2007. We start to see the wheels coming off in terms of debt and in terms of subprime mortgages. Then we get to the fateful weekend, and to go into the chaos of that weekend, and how Hank Paulson and Tim Geithner called all of the titans of Wall Street to the New York Fed to talk about if, in fact, they could save Lehman Brothers and they could take on some of the toxic assets.
From there I go into what ensued, which spreads wide and spreads deep, because not only did we see that weekend trigger a new sheriff in town, the new president came on board charged with a new reality and charged with new ways of looking at business and new ways of looking at regulation.
That changed business and Wall Street, in particular, because of heavier regulation. It also spread throughout the world because what happened was the debt was transferred from companies to individuals to governments. Then we get into the sovereign debt crisis, and the Greek tragedy, if you will.
I end toward really right where we are now in terms of looking at new financial regulation — Fin Reg — and how Wall Street will change. Because when you think about it there were, at the peak, more than five investment banks. Today there are none, because of course, Goldman Sachs and Morgan Stanley have become bank-holding companies.
Much has changed in terms of the look of Wall Street. It’s also changed in terms of the services that consumers get and how investors approach their lives.
A lot of ripple effects came from that weekend. I’m so proud of this book.
More video clips from our interview with Maria Bartiromo:
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