Chapter 2523 Seeking Advice

"The reason for submitting that report, the process of writing that report... I remember it clearly now,"

"Although I personally could not profit from that report, writing that report was one of the most serious things I have done over the years," Feng Yiping said.

"Fon, Feng," Paulson shouted repeatedly, "I know, I understand..."

"You should understand," Feng Yiping stood up. "If you, the former head of Goldman Sachs and now the main framer of U.S. economic policy, can't understand, then,"

He shook his head, "I really don't have any hope for the longer-term future of the U.S. economy,"

"China and the United States will be the two largest economies in the world now and probably for a long time to come, and they will also be each other's largest trading partners,"

"Under such a situation, if the U.S. business community is short-sighted when cooperating with China, especially companies with Chinese government backgrounds, and may even consider using deceptive means,"

He looked at Paulson and said, "I don't think this will have a good impact on our cooperation and mutual trust in trade,"

"I also don't think it would be beneficial to U.S. interests,"

Not to mention that Wall Street concentrated on choosing to cooperate with us in depth in 2007. Did you feel that something was not good, so you quickly found a capable person to share the possibility.

Judging from the original investment agreement signed between CIC and Morgan Stanley, it is obvious that they do not really regard domestic companies as their partners.

What is pictured is nothing but our money.

"Yes, I completely understand," Paulson stood up and pulled Feng Yiping to a chair to sit down.

"I actually appreciate your approach very much. We," he pointed at himself and then at Feng Yiping, "are all patriots."

"Wealth is not our ultimate goal. We all have higher pursuits... What's wrong with you Feng?" He looked at Feng Yiping.

Feng Yiping distanced himself from him at this time and looked at him in surprise.

"Nothing," Feng Yiping sat upright.

He just wasn't used to praising himself like this.

The Lun family has always been very humble.

Being interrupted like this by Feng Yiping, Paulson felt briefly uncomfortable. After sorting himself out, he continued, "So, I feel at ease when dealing with you. I believe in your personality and integrity, and these two things, whether in Washington Or Wall Street, both are hard to find,”

Feng Yiping nodded, but he couldn't help but ask in his heart, do you still have these two things on you?

Whether in Washington or Wall Street, you have reached a high level that is difficult for ordinary people to reach.

"Okay, let's not talk about this," Paulson smiled.

He only mentioned this because he thought that Feng Yiping felt a little guilty when facing him, and he felt that the way he mentioned it was almost a joke, but he did not expect that Feng Yiping would react like this. .

——Because he didn’t know that in the morning, the former Finance Minister also found Feng Yiping, and made Feng Yiping very unhappy.

"Feng, you are right. Our problem now is not not to provide assistance, but how to provide assistance."

This is why Feng Yiping is willing to discuss this issue with him but not with Summers.

Paulson is more practical because he faces pressure head-on, while Summers has an attitude of watching from afar, so he pursues perfection without knowing the importance.

Because the more perfect the plan is, the less trouble it will bring to him, who thinks he will be able to control the U.S. economy like Paulson in the future.

"Bear Stearns," Paulson said after a moment of silence, "looks very bad."

Things are indeed looking very bad for Bear Stearns, and its stock price continues to fall today.

This is not because the house leaked and it rained all night. It can be said that the house leaked and it rained all night, and then there was a mudslide.

Feng Yiping glanced at him and said, "Bear Stearns is not the most critical issue. The key issue is, will this be a beginning?"

"After Bear Stearns, will it be Lehman Brothers' turn, Merrill Lynch's turn, Morgan Stanley and Goldman Sachs..."

"Then the U.S. economy is doomed," Paulson said. "So, Bear Stearns, we have to save it."

It may not be the turn of Lehman and the other four companies, but Paulson and the others obviously cannot take such a risk.

The Treasury Department already has a team studying the impact on the financial system after the collapse of investment banks like Bear Stearns.

The results of the study are undoubtedly very pessimistic.

Because there is no such title as investment bank in China, we are not very familiar with investment banks, but if we make an analogy, everyone will understand it very well.

Investment banks in the United States are roughly equivalent to our domestic securities firms.

If a securities company goes bankrupt, usually everyone's first reaction is to go to its superiors.

But this is actually of no use.

This is useful if a commercial bank fails. The ultimate superior of a commercial bank is the central bank, and the central bank is the lender of last resort.

Then, the government can also step in, take over the bank, let it liquidate or sell it... plus the insurance company's compensation to compensate everyone's deposits.

But if a securities company goes bankrupt and you go to the China Securities Regulatory Commission, what’s the use?

Will it still give you money?

The regulatory agency for U.S. investment banks is also the U.S. Securities and Exchange Commission.

So, if they go bankrupt, the American people who suffer losses will also have no place to seek justice.

But the current situation faced by Paulson and others is that they cannot ignore it.

Let's take the domestic situation as an example. If the domestic securities companies such as Hengtai and Tianfeng go bankrupt, what kind of impact will it bring?

In fact, it is not unbearable, because their overall strength is average.

But if the top five, such as Guangfa, which is generally ranked fifth, go bankrupt, can it still be borne?

Furthermore, if Guangfa and the four before it, Huatai, Guotai, Haitong, and the boss CITIC Securities, these top domestic securities companies all go bankrupt, what will the situation be?

In that case, people who do not open accounts in securities companies will not be affected?

Obviously impossible, including those who do not know what securities are, will inevitably be affected.

That is actually equivalent to another doomsday.

So, can the government ignore it?

But if it really comes to that time to intervene, to be honest, it is really impossible to intervene, and no one can save the situation.

At least, we should take action when Guangfa has problems.

The current environment is that, except for a few countries, mainly China, all financial institutions in other countries are in turmoil.

It is now the time when large, global, and intertwined financial institutions are in vogue.

If international, large financial institutions like Bear Stearns are allowed to go bankrupt at this time, the consequences will certainly be even more disastrous, and it is not an exaggeration to say that it is a catastrophe.

Therefore, saving Bear Stearns is to boost market confidence, try to avoid a sharp deterioration of the situation in the near future, and leave more time for subsequent actions.

"Are you planning to find a company to acquire it?" Feng Yiping asked.

Under the current circumstances, it is not realistic to inject capital directly into Bear Stearns, because you cannot expect all American people to see such a systemic risk, that is, not only Bear Stearns, but also the other four investment banks on Wall Street will go bankrupt.

So the only feasible way at present is acquisition.

"That's what we plan to do. After all, Bear Stearns is also a very well-known company," Paulson said.

Of course, even now, Bear Stearns is still a golden sign in the minds of many people, so it is not difficult to find a buyer.

"Then the question is, the pricing of Bear Stearns' securities assets," Feng Yiping said.

Among Bear Stearns' assets, securities assets, that is, subprime loans, will definitely account for a considerable part, and who is willing to buy a large amount of subprime loans at this time?

"We already have a general solution to this problem. We will package their assets as collateral and apply for a loan of the same amount from the New York Federal Reserve. This loan will be directly handed over to the acquisition company,"

"What if this loan is lost?" Feng Yiping asked.

For example, how much will the subprime securities worth tens of billions of dollars be worth in the future? Who can tell?

Generally speaking, it will definitely depreciate, and depreciate very sharply.

"This loan will be guaranteed by the Ministry of Finance,"

That is, the country will bear the loss.

"What about Congress?" Feng Yiping asked.

These things naturally cannot be decided by them and the White House. If Congress does not approve, it will not be implemented at all.

"We will convince Congress," Paulson said louder.

Although it sounds a little lacking in confidence, the courage and will are unquestionable.

"I believe you can do it too," Feng Yiping smiled.

This is actually feasible, because the profits generated by the operations of the Federal Reserve and the New York Federal Reserve must be handed over to the U.S. Treasury.

Since the Treasury has a guarantee, then when the loan suffers losses in the future, they can just hand over less profits accordingly.

"So, the problem is actually solved, isn't it?"

Paulson glanced at Feng Yiping, stood up, opened the door, walked outside to take a look, and said something, then sat down again, his voice even lower, "You know, this is not what I want to talk to you about."

Indeed, if it was just Bear Stearns, why would he find Feng Yiping?

"One Bear Stearns is not difficult to solve. The problem now is that I, my colleagues, and friends at the Federal Reserve are not sure at the moment..."

He glanced at the door again and approached Feng Yiping, "Feng, how big do you think the crisis will be in the end?"

No wonder he made those moves just now, he was asking Feng Yiping for advice.

If Summers saw this scene, he would be shocked and speechless.

Although they are both Treasury Secretary, Paulson has much more power than when he was Treasury Secretary. Paulson is the chief adviser and spokesperson for all domestic and international economic issues of Bush Jr. In simple terms, he is the person who has overall control over the US economy.

How can a general Treasury Secretary have such power?

And such a person who has overall control over the US economy is now seeking Feng Yiping's opinion on such a critical issue...

If Summers saw this scene, he probably wouldn't have thought too much about it.

But Paulson's move was not without reason.

He naturally had an expectation of the development of the situation.

But compared to Feng Yiping's consistent determination and confidence on this issue, for example, more than a year ago, Feng Yiping solemnly warned that the US financial system had systemic risks; and a few days ago, he bluntly said that it would be best to prepare a rescue plan from now on...

Paulson was sure that neither he nor the people around him could compare with Feng Yiping in terms of accuracy or confidence in judging this matter.

In addition, Feng Yiping has never made any mistakes in the decisions he has made...

So in this regard, he now trusts Feng Yiping's judgment more.

"Hank, I think the US economic team under your leadership should have made accurate predictions on this issue," Feng Yiping did not answer his question directly.

"There are also many well-known economists who have expressed many views on this issue,"

"My views may not be more accurate than theirs,"

Paulson didn't know what to say? Are you forcing me to praise you or what?

"Those people may be more proficient than you in some academic fields, but in this matter, they are all inferior to you. I only trust your judgment,"

"Hank, do you know that you put a lot of pressure on me?"

But Mr. Feng was still happy at this time. After all, few people can have such an opportunity, right?

Should we wait for him to visit us three times before we talk?