A Fighting Chance

On Friday, November 21, I stood at the big gates in front of the Treasury Building and tried to catch my breath. I met up with two of my fellow panelists: Damon Silvers and Richard Neiman. The three of us were the Democratic appointees; Speaker Nancy Pelosi had appointed Richard, Senator Reid had appointed me, and the two lawmakers jointly had appointed Damon.

Damon Silvers is a big guy—tall, with big hands and big feet. He wears loose-fitting black suits and white wash-and-wear shirts, and he talks with the kind of speed that suggests his brain is full of ideas that are elbowing to get out all at once. After getting three degrees from Harvard—undergraduate, MBA, and law—he could have gone for the big bucks, but that wasn’t Damon. Instead, he organized strawberry pickers in California and shipyard workers in New Orleans, and eventually he became associate general counsel of the AFL-CIO. I knew him a little from the bankruptcy wars, when the AFL had weighed in on our side against the big banks, and I figured I was in good company.

The other panelist, Richard Neiman, had started as a banking regulator, then spent much of his career in the banking industry before becoming New York’s chief banking supervisor. I didn’t know Richard before that day, but I hoped his extensive experience would be helpful.

The Treasury Building is a National Historic Landmark that looks a lot like the White House—only much bigger and more fortress-like. It’s 120,000 square feet of stately columns and white marble, all of it carefully guarded behind iron gates, with no public access. Its security is run by the Secret Service. Behind the gates is the first guard station, where visitors must be cleared; the second security check—including a walk-through metal detector and a full screen of all packages—is located just inside the building. Visitors must be checked twice to make certain they are on pre-cleared lists. After we were allowed to pass, we were met by an escort who walked us quickly to the meeting room.

This was my first visit to the Treasury Building, but there was no time to look around. We were told that Secretary Paulson was not available, but we would be spending a few minutes with other officials, including Neel Kashkari, Paulson’s assistant secretary, who had been named to administer TARP.

We knew time was tight, so as soon as Kashkari appeared we jumped straight to the point of our visit. We pressed him on the status of the big financial institutions: Did Treasury anticipate additional bailout assistance to the giant banks? Could we see the terms of the arrangements that had been worked out so far? Kashkari objected to the word bailout, so we wrangled about that for a couple of minutes. But he was very clear on one point: The big cash injections were done, and Treasury would now concentrate on getting assistance to smaller banks.

The meeting was short, and we were soon back out on the street, outside the heavy iron gates.

Our meeting was on Friday. Less than forty-eight hours later, the news broke that Treasury had just made a huge new commitment to Citibank, a giant bank that had already received $25 billion in TARP money. Now Treasury was giving $20 billion in additional TARP bailout funds to Citibank, plus a $306 billion taxpayer guarantee. The numbers were staggering—and the timing was even more staggering. As best we could piece together from the news reports, at the same time we were receiving reassurances from the head of TARP that the big bailouts were finished, his colleagues were down the hall negotiating this gargantuan deal to bail out Citibank for a second time. In fact, the special inspector general for TARP would later report that this weekend was known in the halls of Treasury as “Citi-weekend.”

I was stunned—and furious. I understood that this was a crisis, and I knew that sensitive information might need to be closely held. I also understood that we might be asked to keep something confidential for a period of time or even that some official might say, “I can’t tell you that right now” and explain why. But that wasn’t what had happened. During our meeting, the team at Treasury didn’t hesitate and didn’t hedge. They sent us out of the room knowing we believed that the big bailouts were over and knowing exactly how wrong that belief was.

Our panel hadn’t even had our first organizational meeting, but whatever vision I’d had of cooperation and candor had vanished. If we wanted any transparency in this process, we would have to fight for it every inch of the way.

What Is a TARP?



As I thought about COP’s mission, I kept coming back to one number: $700 billion. That number kept me awake at night. Heck, it still keeps me up from time to time. It’s hard to put in perspective just how gigantic that number was.

Sure, there were crazy comparisons. We could have bought seven laptops for every child in America. We could have sent thirteen million kids to a private university. We could have put a large colony of badgers on Mars. (Well, maybe not.)