Upstairs

In late 2008, I worked at NBC between the New York Stock Exchange. a studio in Times Square and 30 Rockefeller Center.

Bruce Wasserstein worked upstairs at Rockefeller Center.

He was the CEO of Lazard at the time and one of the kings of Wall Street. One day in November or December, I took the elevator up for lunch with him in his private dining room to discuss the ongoing financial crisis.

Inside, branzino, asparagus, sparkling water, profiteroles

Outside, the financial system was collapsing.

We were talking about the government’s response when Bruce leaned back in his chair.

“Dylan, this is the largest theft and cover-up in American history,” he said.

I asked him how.

He explained it simply. Wall Street had created enormous financial risks basically using unregulated credit insurance to create the appearance of default “coverage,” Those risks blew defaulted, the insurance couldn’t pay. The government stepped in.

AIG was rescued. Its counterparties were paid 100 cents on the dollar by us.. Trillions in guarantees and liquidity flooded the financial system and years of bonus pools had been paid out based on the false claim of “managed risk.” The people who created the risk escaped consequence - and in fact made more money all while being covered by the government of Bush and the Obama.

I asked him who was responsible.

“The CEO and the board of every bank.”

Bruce was a bank CEO himself, not exactly an Occupy Wall Street park protestor.

He told me a bank CEO only has three jobs.

Manage Risk.

Make Sales.

Guide Vision.

The CEO’s job is to decide how much total risk the institution is willing to take. That decision belongs to the bank CEO. So do the consequences.

Bruce explained to me that the CEOs of America’s largest banks had catastrophically failed at the most important job they had — and then taken the American pension and retirement funds hostage if they weren’t bailed out.

Risk management.

Their decisions created a financial crisis that destroyed jobs, homes, savings and lives.

Then they were protected from the consequences of those decisions.

That was Bruce’s point. The bonuses paid out on the years of previous credit issuance and the government payout to all of them at the end was the theft. Then distraction of the so-called health care reform (also a massive giveaway to the insurance companies) was used to to burn off the political energy of the moment and then pass financial reform years later certifying the same basic system, only bigger and with a direct connection to the central bank for future bailouts in order to bypass Congress and reduce attention on their actions.

I finished my profiteroles and went back downstairs.

But I never looked at the financial crisis the same way again. I became more aggressive in my reporting.

Eventually it changed my career.

I turned down a larger opportunity at ABC and took a lower-paying job at MSNBC because I wanted to talk about the relationship between money and political power.

Bruce died in 2009.

If I could take that elevator upstairs and have lunch with him again, I wouldn’t ask him about AIG.

I’d ask him if he understood what came next.

Because the government succeeded in stabilizing the financial system.

But there was another cost. TRUST.

Today, Gallup reports that 89 percent of Americans believe corruption is widespread in their government.

I don’t think those things are unrelated.

Bruce called what happened a theft and a cover-up.

Eighteen years later, I think the most expensive thing we lost wasn’t money.

Money can be replaced.

Trust can’t.