PBS Frontline interviews for anyone wanting to fill some blanks, from the horses mouth.....

excerpted (2nd interview Well Fargo AAA bank forced to accept capital at the peak):

What did you say?

I was stunned. And I was going to say some things, and I decided not to say [them].

Well, share with us now what you --

But just think about this contradiction just for a minute.

I mean, you're upset.

I am more than upset.

So you're pissed.

Really pissed. I'm pissed because it's the wrong decision. See, it's not about Wells Fargo. If I believed that this would increase the confidence in us, I'd be right there.

So you think it was a dumb policy move.

One of the worst economic decisions in the history of the United States, because it's not going to work, and you're putting too big to fail in forever.

So you talked for a while. Paulson interrupts you and says again?

That the regulator is sitting right next to me.


Yes, Bernanke. I assume that's who he was referring to. He was on his left side. "And he will declare you capital-deficient on Monday morning." Now think about this contradiction: He admits at the beginning of the meeting you don't need it, but if you don't take it, we are going to not tell the truth to the American public that you really did need it. We're going to lie.

Translate for us what that means when the Fed tells a bank that they're capital-deficient.

Well, first of all, we had not closed on the Wachovia deal. This was October, and we wanted to close on Dec. 31. The first thing is, you cannot acquire somebody if you're capital-deficient, so number one. Number two, you can't do anything if you're capital-deficient. You can't grow. I mean, they'll put the conditions on you, but usually you can't grow; you can't buy anything; you might have to shrink; you can't pay dividends. Once they don't want you to do something -- once you're capital-deficient, anything they don't want you to do you don't do.

You might as well shut your office and go home.

And you're certainly not going to acquire Wachovia.

That's a threat.

No, it's not a threat; it's Godfather. What was the phrase? Give me a proposition I couldn't refuse?

"We're going to make an offer --"

Yeah, make an offer that you can't refuse.

That's what you were hearing.

Clearly. But the point I want to make is, I was arguing this was a mistake for America.

What did he say to that?

Well, there was no discussion. That's what I said. He said, "your regulator is sitting right over here. " Then he said, "Now, you can think about this." I also said: "I can't even make this decision. How can I make a decision on $25 billion without a board of directors?" He says, "You have an hour. Your regulator will come and talk to you. " In this case, it's the OCC for us. And give us your decision in an hour."

And basically the meeting was over.