I took my stool at Bar Pilar, eager to finally enjoy a day off after working for a couple weeks straight covering the federal takeover of Fannie Mae and Freddie Mac. It was Sunday, Sept. 14, 2008. The Washington Redskins and New Orleans Saints were playing a 1 p.m. game. I was eager to watch it.
The Treasury and the Federal Reserve had been working overtime for weeks trying to keep the global financial system from coming unglued, and reporters like me who covered those institutions, it had been nearly as grueling, as we all scurried to make sense of what they were doing—and to beat the competition on figuring out what they would to next.
Weekend bailout adventures had already become so commonplace that the Financial Times had a memorable headline a few days earlier, Sept. 10, urging the treasury secretary, Henry Paulson, to “Take this weekend off, Hank.”
Hank did not take the weekend off.
Sometime in the first quarter of Redskins-Saints, halfway through my first Viking lager (with hindsight, an Icelandic beer was quite appropriate given the financial palpitations about to occur), I received an e-mail on my BlackBerry from a source.
“Are you in the office?” the person asked.
“Should I be?” I replied.
“You might want to be in the office.”
“Can it wait until halftime?”
“You might want to be in the office.”
So I went into the office, and indeed the source was correct. That evening, Lehman Brothers announced it would go bankrupt, Bank of America was buying Merrill Lynch, AIG sat on the precipice of failure, and a global financial rout was set to begin. We ripped up the front page of the next day’s Post and tried, in the late evening of that Sunday night, to figure out what we could about what had happened and what it meant. The lede on one of the stories I wrote that evening holds up well: “The U.S. financial system this weekend faced its gravest crisis in modern times, as regulators resorted to triage on Wall Street to contain the spreading damage from a meltdown in the housing and mortgage market.”
Financial writers don’t usually experience fear on the job. War correspondents put their lives on the line as a matter of course; the biggest risk that economics writers usually face on the job is that they will eat an undercooked piece of chicken at some conference.
But that fall, as I did my work as the Post’s Federal Reserve reporter, it was against a backdrop of deeply felt fear, for what the world’s economic future had in store.
Lines on the Bloomberg terminal were moving in directions that didn’t seem possible, once-obscure measures of interbank lending breaking down
The scariest time for me were the 48 hour period between the announcement of an AIG bailout Tuesday night, Sept. 16, and the proposal of what would become the TARP financial rescue, Sept. 18. This was a moment when it seemed that the other major investment banks, Goldman Sachs and Morgan Stanley, could fail at any moment and it was not clear whether policymakers had a handle on the scale of the panic they faced.
The weeks that followed were a grinding series of stresses.
No days off. Late nights at the office trying to make sense of what was happening and put the next day’s paper to bed. I wrote or contributed to 72 stories in the Post in September and October of 2008. Pretty routinely there would be a 6:30 a.m. phone call from the Fed’s press office, letting us know that there was an embargoed announcement coming out an hour later, the latest special emergency lending program.
And that’s just the stuff that was real. The rumors were rampant, of which firm was about to fail, or be bailed out.
One particularly persistent rumor was that the Fed was on the verge of extending emergency loans to automakers. Everything I knew about the central bank, its authorities, and its sensibility told me that it would never help out an industrial firm like GM the way it had financial firms like Bear Stearns and AIG. My sources were dismissive of the possibility. But after all the things I had seen earlier that year, who could really be sure?
I spent the fall of 2008 terrified, stressed, and exhausted. And I didn’t even have responsibility for making any policy decisions! In my own writing, including my book on the work of the global central bankers through the crisis, I have taken a generally sympathetic view toward the leaders who were trying to guide the world away from the abyss: Hank Paulson, Ben Bernanke, Tim Geithner, and their counterparts across the globe.
This sympathy is rooted in no small part in knowing how bad things looked to be getting—and how difficult it was just write about such momentous upheaval in a time of fast-moving crisis and imperfect information. The policymakers faced stress, fear and exhaustion that makes my own seem like child’s play, yet kept level heads and made decisions that prevented a complete global collapse.
I didn't get to watch much football that fall of 2008. But I did get to watch a victory that was much more important.