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528 pages, Kindle Edition
First published September 20, 2011
'Repo' was industry-speak for “repurchase agreement,” a growing practice in the financial sector by which firms borrowed and lent each other huge sums of money on short-term bases—a few weeks, a few days, sometimes just overnight. Like any other loan, collateral has to be put up to secure the loan. . . . Bear Stearns died because it could not roll over its repo book. Why? It was using mortgage-backed securities and related derivatives, still sporting their triple-A ratings from Moody’s, as collateral. In its final weeks, other firms, getting jittery about Bear, were shorting the repo durations, from months to weeks to days. In its last week, Bear had to raise $50 billion a night in repos to replace the expiration of its day-to-day obligations and to fund operations. This is called “rolling your book” of debts. This is how financial firms die in this era. It’s not from losses, or declining revenues. It happens when they can’t roll their debts—essentially replacing old credit cards with new ones, every day. Note that point 'Bear had to raise $50 billion a night in repos to replace the expiration of its day-to-day obligations and to fund operations.'
While Orszag wouldn’t publicly affirm Summer’s critique of the president’s abilities - saying later, “I don’t want to go there” - he wouldn’t disagree either. He sat in meeting after meeting where the president would cover the same issue, or controversy, or policy dilemma, and “relitigate” it, in the president’s parlance, over and over. Decisions were left unmade; policies drifted without direction. It wasn’t a matter of intellectual framing. The president seemed to grasp the nature of key policy dilemmas, like a journalist, or narrator, or skilled observer. The problem was in guiding the analysis toward what a president is paid, and elected, to do: make tough decisions.
When the bankers arrived in the State Dining Room, sitting under a portrait of a glowering Lincoln, Obama had them scared and ready to do almost anything he said. An hour later, they were upbeat, ready to fly home and commence business as usual.
Health care reform had officially become health insurance reform. The providers were no longer up nights worrying, and they certainly had not welcomed Ignagni back into their midst… She was alone in saying what no one wanted to hear: that there was little real cost control in any of the bills.