Same words he would use every day as my chief of staff, mr. President , thank you for the privilege of serving. Did you say that i did. Sometimes it was a variation of it. Visited of staff, i with the president first thing every morning. He typically got to his desk about 6 45. I would give him about five minutes to get settled. Persondition was, first that the president sees is the chief of staff. I would walk in at about 6 50 in the morning and i always said something to the effect of, thank you for the privilege of serving. It wasnt intended to flatter him or to thank him. It was intended to remind me and help me remind everybody else what a privilege it was to be inside the white house. So i just made it a habit. I am glad i did. It was a privilege everyday. What did he say back . Nothing. He would just move on. President who i think really understood the presidency, understood both the responsibility and the privilege of being in the oval office. So he didnt need the reminding. He probably didnt even need the reminding that i was appreciative and sensitive to it. But i wanted myself and everybody to be aware of both the burdens and the joys we had of being there. Especially, because i was president bushs last chief of staff, i served roughly the last three years, i wanted everybody around me and myself to be keenly aware that we had limited time. We werent owners. We were tenants. We had to treat everyday day as an opportunity as well as a privilege. I have always said that there are about 4000 people in this town that were president of their class, president of their student body, and they are all competing. You were president of your class at princeton . Junior year. You were president of your student counsel in high school. Yes, i think so. [laughter] you would think you might remember that. I was what they called the senior prefect. When did you think that you were going to be involved in leadership and why . I grew up here in d. C. And i probably didnt sense it at the time but it is a company town. Business,to the local which was all around me as i was growing up so it seemed perfectly natural. I was always interested in good leadership. I dont think i ever thought of myself as a particularly brilliant leader but i was always interested in how that is done. I think i spent a lot of my career helping other people to be good leaders. I hope i ultimately was one myself. When you think back about the last three years, what is the first thing that comes to your mind . About the Bush Administration . When you were chief of staff. What flashes in front of you . A lot of things. Both a trauma and a recency affect to the financial crisis. That was the last thing that happened on the way out the door for the Bush Administration. You have to appreciate that we had gone through 7. 5 very difficult tumultuous years. Hugely consequential. Dramatic changes in the world and in the united states. Recession, a crisis of confidence in american attacks, the war in afghanistan, the war in iraq, hurricane katrina. As we approached the last year of the Bush Administration, as we got to 7. 5 years and, most of us thought, lets try to wrap this up in a responsible and effective way. For whoever ran the presidency, leave the print the country and the white house in as good as shape as possible for that next person. And we were hit with the financial crisis which really exploded in september of 2008. It had been festering for a few months but i dont think anybody happened int september and october of 2008. When i think of the three years that i served as chief of staff, that explosion of economic crisis, of financial crisis right at the end is what comes to my mind. Was there a time that that period that you were afraid that is a strange word over utah, this could really be bad . I have been asked periodically, when were you most afraid during your Government Service . My service in government spanned the entire tea of bush 43s administration from january 2001 to january 2009. Including 9 11. When asked what was the scariest moments, people are always expecting me to say 9 11 and in reality, it wasnt. One inere more than september and october of 2008 when a genuinely appeared and probably was true that the Global Financial system was on the verge of a collapse comparable to or worse than what was experienced during the Great Depression. What is the first thing you did . When did you know it . It was probably the immediate aftermath of the collapse of Lehman Brothers. Cascade ofn ongoing traumatic events that led up to that. In midseptember, over a weekend, Lehman Brothers despite our efforts i say our, i mean the efforts of the treasury and of the fed to put together some kind of rescue for one of americas big and venerated Investment Banking houses. That failed over a weekend. As the week opened, Lehman Brothers declared bankruptcy and folded abruptly. I think that was the first thatt that i at least felt the wheels on the bus might be coming off. Do your a member what the president said to you at any time and how you got involved in dealing with the crisis . I dont remember what the president said immediately at that moment. There were several moments during the crisis when the president would take in all of andadvice he was getting chew on it, reflect on it. In those circumstances, he really made a decision immediately on the spot. He would think about it if there was time and let his advisers know what he had decided maybe the next morning. After he had a chance to chew over the advice he had gotten. There were several circumstances occasions during the financial crisis when the president , as scary as the role ofn was, took the the leader and said, we will get through this. He was very sensitive to anybody or gettingpanicking completely desperate. He would always he would make some tough decisions and say, we will get through this. The one i remember most vividly was after the collapse of Lehman Brothers. We started to see a cascading effect of markets seizing up. Banks would not lend to each other. There was no liquidity. Hank paulson, the treasury to ask for ame in meeting with the president and his senior advisers. Him thelson had with chairman of the fed, ben bernanke and the president of the new york fed, tim geithner. We also had the chairman of the Securities Exchange commission present and a couple of other officials. It was at that meeting that hank paulson asked the president for authority to go to congress to request what turned out to be outt 1 trillion in bail money for the banks. To use it for other assets but it was used to inject equity into a lot of trouble institutions. For a goodking thing solid republican president to be confronting is the treasury secretary coming in, saying, we need 700 billion or 800 billion immediately from congress in order to use that money to rescue banks that are failing. This was one occasion where the president made a decision on the spot. , what happensnke if we dont do this . Bernanke being a scholar of the Great Depression and a very wise clearly very was frightened about the state of the Financial System and he said, mr. President , we could be looking at circumstances similar to or worse than the Great Depression. Said, thatnt then makes it easy. Lets go. , as peoplemeeting were Milling Around and talking, president bush went around to all of the principals involved and had a private word each one of them. He comforted everybody because it was a shocking decision to have to make, comforted everybody and said, dont worry, we are doing the right thing. We will get through this. D remember ever watching someone come to the oval office face,e, somewhat in his talk back to him, tell him what they really thought . People say all the time that nobody will speak up to the president. President bush encouraged people to speak up to him. Nobody likes to be treated disrespectfully but he encouraged people to speak candidly with him and tended to reward it by paying attention. But there is something about the oval office of which president bush was keenly aware, which is people plan to come in and give the president a piece of their mind. Say, mr. There and president , you look great today. Everyone hates to give him bad news. That is part of the role of the chief of staff. When everybody is gone, the chief of staff is the one who should say, they werent telling you something. The news is worse than they were saying. Is moreinet member disappointed and angry than you think and feels strongly that his colleagues are taking us in the wrong direction. But he didnt want to say so in the oval office. So, a good president has to be able to break through that. You wont get many people coming in and getting in the face of the president even, sometimes, when they should. Who was in your experience around him you were, your job was what . Deputy chief of staff for policy, two years. Next you did what . Budget director, three years. And then, chief of staff, three years. In all that time, who spoke i know you never wrote the book, you dont like to talk about this, but who spoke up the most in any meeting . Interesting question. Was somebody who often had views contrary to what the president the flow of opinion might be. With a brilliant man eclectic knowledge, so he had confidence both from his own abilities and knowledge and from his longstanding close relationship with the president , to speak up in ways that others might not. He was the first person i think of who would sometimes tell the emperor that his clothing was frayed at a minimum. You got your law degree where . Stanford. You work for Goldman Sachs for how long . Five years. Where . London. Doing what . I was part of the Law Department there. Withle was principally Public Policy and government policy. I had the opportunity to give both advice on what was happening in Public Policy that was relevant to the banking business and to work on issues of Public Policy that affected the banking business that Goldman Sachs was doing in europe. A lot of americans are suspicious of the connection between a josh fulton who worked at Goldman Sachs, the relationship to new york and the bankers, and george bush says in his book that you were responsible for bringing him paulson. I am responsible for bringing in hank paulson. The Conspiracy Theory doesnt hold up because i didnt really know hank paulson when i worked at goldman. A good job, ahad lot of interesting responsibilities but i was not a big cheese at Goldman Sachs during the five years i worked there in the late 90s. Aftermath as my government career took me to higher and higher positions, i found that that also tended to elevate what had done before. Being moderately senior at Goldman Sachs to being running europe for Goldman Sachs, which i didnt. I did know hank paulson. I met him when i was at golden sachs. What i did know when i became chief of staff was that we had oveready five years five years in the Bush Administration without a significant financial crisis. I knew from my experience at goldman and elsewhere that it is very rare that any administration can go eight years without some kind of internationally significant financial crisis. When i came in as chief of staff , i told the president that as our incumbent treasury secretary was also beginning to come to the end of his john snow . He had already served for over three years and was beginning to come to the end of his time. I told the president that i thought it was very important in the final three years of his presidency that we bring in a treasury secretary who have real market credibility. As preferablyravit at the head of one of the large wall street institutions. In the wake of the enron crisis, there was a great deal of reticence and government about bringing in wall street people to serve in government. Their reputations had fallen so low. I thought, we find somebody of integrity in whom people on both sides of the aisle can have confidence. Wood, maybe will be lucky to get through the next three years without a financial crisis but we will be the first one to have. He was a tough sell. I went straight in the front said, we are starting to look at who can replace john snow as treasury secretary. The president would like to consider you. Who gets approached for that kind of thing is going to be flattered but his reaction was, not really. He was sitting on top of the world. He was the leader of what at the time was possibly one of the most successful Financial Enterprises in the history of mankind. He is not a mercenary guy at all. But he is successdriven. He was a successful leader of the most successful Financial Institution may be the history of the world. He was worth 700 Million Dollars at least . Probably. If you know hank, you know that is not what animates him. He is very aggressive, success driven person. Personally isim not significant. That is the way you measure success in banking. And, he looked at the Bush Administration in 2006, not hugely popular, probably not a great deal of agenda to pursue. So i tried to will him woo him partly with the assertion i just made which was, we are not likely to be lucky enough to go another three years without a financial crisis. Number two, there are interesting things to be done. We are aggressively pursuing Social Security reform. We want to aggressively pursue eform of our government sponsored enterprises, fannie mae and freddie mac. Laterns out, we were too to try to get control of that situation. Whatwere at the core of triggered the financial crisis. Did you know that was coming . No. Toont want to give myself much credit, i had no idea what was coming. If you force me to say what kind of financial crisis do you think is coming, i would have said probably a foreign currency crisis. That is what typically happens in the past. When did george bush the president stop appointing people, nominating them for the board of fannie and freddie . I dont remember what year it was but i thought it was an important statement of principle. We believe that those organizations were getting too large and that the government involvement with them was creating an untenable situation in which the markets would continue to pour money into fannie and freddie without the market disciplines because everybody figured that there wouldnt be and government had already claimed there is no backstop. We tried to withdraw that from the government. This is the case that i was making to hank paulson. Doesnseem very big to me. What he was interested in was china. I said, there is a lot to be done there to deepen the economic relationship and try to make sure that china proceeds along a responsible path with its explosive economic development. But he said no. I went back to him and persuaded him to come visit with the president. He said, ok. He had kind of warmed back up to the idea. This was over a period of two or three months. He had warmed up to the idea so i arranged an appointment for him to visit with the president because i thought that if he got to know the president better, he would feel like this is a team he wants to be on. He called me up the day before saying, he thought about it and talked to some people on his own team who understood washington, who told him you dont go visit the president unless youre going to say yes. He said he didnt expect to say yes so the couldnt in good conscience take the visit. So he fell off the radar screen for a couple more weeks. We had him do a lunch at the fore house, a state bunch president of china. That got his juices flowing again. After that lunch, i asked to visit with him again and he finally said yes subject to some conditions. They really hit it off but it took a long time to sell him and in his very interesting book, he discloses that when his mother found out that he was going to work for george w. Bush, she burst into tears. Heeded or she did . She did. She wasnt a republican . Was he a republican . Yes. But at the time, that was a and maybee breed even especially in wall street. His wife was not a republican. She was a friend of Hillary Clintons from college. So he was swimming against a pretty strong cultural and familial tie to come into the Bush Administration. Leading back to freddie and fannie. Five board seats that every president had. There wasnt a lot of publicity. I found it in the New York Times that george bush stopped appointing people. If your predecessors think rahm emanuel went on the board but outsiders dont ever see this. There are so many insiders who have made a tremendous amount of money off of that. It is still there. They are not public corporations like they used to be but you saw all this up close. How did it ever get away from us as people that these institutions were created and people in politics made that kind of money . Really good question. It happened over a period of decades. Fannie and freddie were very successful at their mission of creating a stable and inclusive Mortgage Market so that more and more americans could own their own homes. President s of all stripes including george w. Bush signed to promoting the american dream. Everybody gets to own their own home. During the Bush Administration, we saw homeownership rates rise to their highest level in history. The president was especially proud that those homeownership rates were high among minorities. There was a general political ofh and the intertwining basically public risk and private gain it just developed over time. It is something that in the Bush Administration we recognize was. Roblematic and try to unwind there were powerful voices