CHRIS UHLMANN: Malcolm Turnbull, good morning.
MALCOLM TURNBULL: Good morning Chris.
CHRIS UHLMANN: Now you're a former chairman and managing director of Goldman Sachs. How much blame should merchant banks take for the current financial mess?
MALCOLM TURNBULL: Well as Hank Paulson has said, there's plenty of blame to go around and I agree with those legislators in the US that say that executives of financial institutions should not be rewarded. Indeed, they should get nothing out of this and I'm sure Congress will ensure that happens.
But you know, the world is lucky to have Hank Paulson as US Treasury Secretary right at the moment
. I've worked closely with Hank. He was the chairman of Goldman Sachs, the senior partner when I was a partner of the firm.
And he's shown real leadership in the past.
I mean when Korea ran out of foreign exchange at the end of '97, it was Hank Paulson who brought Wall Street together, who got together with, brought JP Morgan in and showed real leadership in providing the rescue package that got Korea through that very difficult period.
CHRIS UHLMANN: But you and Hank Paulson would also have dealt in these product derivatives that are the toxic waste that's now flowing around
the world. Why should we entrust you, or him, with its salvation?
MALCOLM TURNBULL: Well, let me just say this to you. The, you shouldn't use words like toxic waste. I mean this is what Wayne Swan does
. He uses all of this inflammatory language. What you have is assets, loans that were made to people who didn't have the, in the United States, due to lax regulation and poor lending standards, loans to people who couldn't repay them; loans on houses with inflated values.
And so what you've got is loans, they're not toxic they're just worth a lot less, in many cases, than the amount that was lent.
And what Paulson is seeking to do is to get liquidity back into the system
- not to buy a loan that's worth 60 cents in the dollar for 100 cents, but to buy it to get it out of the frozen situation it is at the moment and to restore liquidity.
CHRIS UHLMANN: But the companies that you worked for took those mortgages that were given to people that didn't have income, assets or jobs, and turned them into other products, derivatives that were rated as AAA assets. Now how can you trade in that kind of money, how can you trade in that kind of system and tell the world that that was a good way to behave
MALCOLM TURNBULL: Well I'm not saying, I'm saying it was a bad way to behave. It was clearly very mistaken