On the Brink: Inside the Race to Stop the Collapse of the Global Financial System

Paulson, Jr., called, I was quick to agree to express in print my enthusiasm for his excellent recounting of some of the most important and controversial events in our recent national history." #### ON THE BRINK is Hank Paulson's first-person account of the catastrophic economic events of 2008. From the man who was in the very middle of this perfect economic storm, Paulson puts the reader in the room for all the intense moments as he addressed urgent market conditions, weighed critical decisions, and debated policy and economic considerations with of all the notable players-including the CEOs of top Wall Street firms as well as Ben Bernanke, Timothy Geithner, Sheila Bair, Nancy Pelosi, Barney Frank, presidential candidates Barack Obama and John McCain, and then-President George W. Bush administration asking for a favorable introduction to anything. But when former secretary of the Treasury Henry M. It's not every day a partisan, liberal Democrat gets a call from a conservative, high-ranking member of the George W. Bush. More than an account about numbers and credit risks gone bad, ON THE BRINK is an extraordinary story about people and politics-all brought together during the world's impending financial Armageddon. From the Foreword, by Rep. Barney Frank, especially written for the trade paper edition: "For many people, what will be most striking about this foreword is the fact that I wrote it.

When Hank Paulson, the former CEO of Goldman Sachs, was appointed in 2006 to become the nation's next Secretary of the Treasury, he knew that his move from Wall Street to Washington would be daunting and challenging. People wouldn't have been able to pay their bills. And in many ways this book is the story of the collision of politics and markets, and it's the story of a race against time to get more authorities. Huge concentration in the industry, so if you had two or three firms go down in succession you'd have a domino effect. You can listen to parts one and two of the Omnivoracious Podcast of the interview, and read a full transcript, in addition to these excerpts:

Amazon.com: You accepted the job as Treasury secretary in 2006, with some reluctance. And I am not shocked but very unhappy we don't have this yet, because people in this country are angry. And we didn't have the tools we needed to work with. Paulson Amazon Interview: Henry M. It's not going to be the banks, or the financial sector. We could see it and it was one of the most frustrating--when I look at the things I could have done better, there were a lot of them and they come out in the book, but the communications challenges were huge. Events no one had thought possible were happening in quick succession, and people all over the globe were terrified that the continuing downward spiral would bring unprecedented chaos. And I told the president I thought there'd be one, and the first major meeting I had with him I spent just talking about that topic. I mean, I sat there when the capital markets froze, before we went to Congress, and the money markets weren't working, and I just tried to think about how to explain this. It's a helpless feeling and it's a terrible feeling, and we should never be in this place. Now they're very angry about bonuses and compensation levels on Wall Street, and rightfully so, after everything that's been done to save Wall Street. This, then, is Hank Paulson's first-person account. You always do. That's the history of mankind. Because I knew--I was seeing major, blue-chip industrial companies that were having trouble raising financing, so I knew with $3.4 trillion of money market funds, and with everything that was just getting ready to break apart, that if the system had collapsed there'd be thousands and thousands and thousands of mainstream industrial companies--middle-sized companies, large companies--that wouldn't be able to raise their short-term funding, finance their inventories, pay their people. The thing I worry about the most is I don't want another Treasury secretary to ever be sitting there like I was, without the tools and authorities you need to protect our country, protect our economy, and protect the people. All eyes turned to the United States Treasury Secretary to avert the disaster. If the system had collapsed, when we were on the brink, unemployement easily could have been at the 25% level that we saw at the Great Depression, and the value destruction--much greater than we've had in terms of home prices and in terms of people's savings accounts and stock portfolios and so on.

Amazon.com: And now it looks like 2010 is going to be the year that the Obama administration tackles financial reform. Paulson puts the reader in the room for all the intense moments as he addressed urgent market conditions, weighed critical decisions, and debated policy and economic considerations with of all the notable players-including the CEOs of top Wall Street firms as well as Ben Bernanke, Timothy Geithner, Sheila Bair, Nancy Pelosi, Barney Frank, presidential candidates Barack Obama and John McCain, and then-President George W. If you go back, as long as we've had banks and financial institutions, there have been excesses, no matter how hard you try to avoid them, and there are going to be financial crises, and we need the tools in place and the regulatory system in place to be able to have a better visibility into what's going on and then be able to put out the fire when it starts, without costing the American people as much as this one did.

Read the full interview. But I did not anticipate a crisis of the magnitude we faced--didn't anticipate that at all--and I certainly was bordering on naive in my understanding of the regulatory powers and authorities in Washington.

Amazon.com: You talked about [Ben] Bernanke's great knowledge of history. Bush. More than an account about numbers and credit risks gone bad, On the Brink is an extraordinary story about people and politics-all brought together during the world's impending financial Armageddon. This would have rippled through the economy. So you need to do everything you can to put out the fire before it gets out of control. This was truly a once-in-a-lifetime economic nightmare. Worst of all, the credit crisis spread to all parts of the U.S. We didn't have the authorities for dealing with major non-banks, and winding them down. The whole system could collapse, and it wouldn't take much to have unemployment levels equal to what we had at the Great Depression, and it could happen very quickly. We would then have had--well, today we have over 10% unemployment. But what they should be angry about is that we have a system that made this necessary. In the last section of your book you mention some lessons that you took out of the crisis.

Paulson: Yeah, this is absolutely critical. economy and grew more ominous with each passing day, destroying jobs across America and undermining the financial security millions of families had spent their lifetimes building. Major institutions including Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Merrill Lynch, and Citigroup, among others-all steeped in rich, longstanding tradition-literally teetered at the edge of collapse. But Paulson had no idea that a year later, he would find himself at the very epicenter of the world's most cataclysmic financial crisis since the Great Depression. Our authorities need to be updated, our financial regulatory structure needs to be updated, and I'm optimistic about the future if we do this.

If we don't, we will have another crisis. We were making do with the authorities we had, which were woefully inadequate.

Amazon.com: And scrambling to get more authories.

Paulson: And scrambling to get more authorities. Paulson on On the Brink

We spoke with Henry M. So in many ways what were doing was we were dealing with--I said in the book--duct tape and baling wire. But at the same time, this is my story, and as hard as I have tried to reflect the contributions made by everyone involved, it is primarily about my work and that of my talented and dedicated team at Treasury.

--Henry M. Read the Author's Note from On the Brink

The pace of events during the financial crisis of 2008 was truly breathtaking. I think to that extent history was an important guide.

Otherwise, there wasn't much you could learn from history. That's terrible. And that's after everything we've done. From the man who was in the very middle of this perfect economic storm, On the Brink is Paulson's fast-paced retelling of the key decisions that had to be made with lightning speed. There can't be many other examples of economic leaders managing a crisis who had as much trust in one another as we did. Did you have any idea what you were getting into?

Paulson: I had a pretty clear idea that there would be a credit crisis sometime when I was in Washington. First of all, history is a guide in one very real sense: that if you let the financial system collapse, and don't do enough to stave off disaster, the people who are going to suffer, the innocent victims, are going to be the American people. And I think one of the things that really comes through in the book is all of the different elements of the crisis that were coming at us simultaneously.

You could just see it. In this book, I have done my best to describe my actions and the thinking behind them during that time, and to convey the breakneck speed at which events were happening all around us.

I believe the most important part of this story is the way Ben Bernanke, Tim Geithner, and I worked as a team through the worst financial crisis since the Great Depression. The regulatory system hadn't been updated since the Great Depression, essentially; the regulatory authorities hadn't. And so what we need to do is we need to channel some of that anger toward fixing the system so never again do we have major financial institutions that are too big to fail.

Amazon.com: And do you worry that the further we get from the crisis the harder it will be to make those necessary reforms?

Paulson: Of course I do. That's a big lesson, but we were dealing with a financial system and markets very different from what had existed many years ago. Paulson in late January 2010, just before the release of On the Brink. Our partnership proved to be an enormous asset during an incredibly difficult period. How much of a guide could history be?

Paulson: I can answer that two ways. Panic ensnared international markets.