Auletta and Cohan Discuss Greed and Geithner

You mentioned greed as a melody that runs throughout this crisis and many crises before when you deal with Wall Street. What about incompetence? What weight do you give to that? People in their silos and compartmentalized information and a lot of people didn’t know that should've known....

Or they say they didn’t, and they believe they didn’t.

But they should have known.

They should have known.

Is that incompetence?

Incompetence. That's an interesting word. They weren't good at their jobs if they didn’t understand how the firm was being funded, the risks it was—I mean, they were using these mortgaged-backed securities as collateral for their overnight financing—to not wonder if that was a good thing to do, aside from the fact that it was cheap financing, is absolutely incompetent. Absolutely incompetent.

I've had some members of the board of Bear Stearns tell this to me: that they feel they should have done a better job in terms of succession planning. Jimmy Cayne stayed 'til he was 74. He, by his own admission, says he didn’t understand how the firm was making money.

Well, if he's getting paid $30 million, $40 million a year, he should know those things, and he should be able to take corrective action. And the fact that the board let him stay in place that long and he didn’t understand really how the firm was making money or the risks it was taking is also the board's responsibility. But as we all know, the cozy relationship that exists between boards of all kinds and CEOs of all kinds is legendary, and it's especially so on Wall Street. Nobody likes somebody who's asking too many questions.

Cayne talked to you and his revelations and candid comments are quite extraordinary. Do you think because he gave you that access he comes out better than he would have had he not given you that access?

I really tried to be fair to him. I think he's very charming, as a lot of these Wall Street guys can be. But he and they can also be very ruthless. A lot of the more salacious rumors that surround him and the firm—they're not really a part of this book. I asked him about things. He denied them. I certainly asked him about the Kate Kelly story about him smoking marijuana. But he denied it.

How important was bridge?

That is, of course, why the book is called House of Cards because of the double entendre. What ended up getting cut, unfortunately, was a story about when I asked Jimmy, "Do you go to casinos? Do you play in casinos? Because bridge is not really a gambling game. There's no money at stake. It's prestige. But do you go into casinos?

All of a sudden, out of his mouth came like 20 minutes of this most technical and pristine and insightful analysis of games of chance in a casino. I mean, this guy really understood this stuff, which, of course, makes the irony all the richer because in bridge you're supposed to understand the cards on the table that can hurt you. I think he understood them on the bridge table, but he obviously didn’t understand them in his firm.