Genius Grandson Of The Loan Shark King

Ben Bernanke’s face turned even paler. He maintained his silence.

“The position of Federal Reserve Chairman isn’t one where you can sit elegantly like a scholar. You have to be more political and more calculating than anyone else. Reality and theory are clearly different. Not wrong—different. I’ve read your papers, and I agree with much of them. But times have changed. And because people failed to adapt to those changes, this crisis arrived.”

I paused briefly before continuing.

“But this still can’t even be called a crisis yet. Most financial institutions, including AIG, Lehman Brothers, Merrill Lynch, and Citigroup, are facing serious danger.”

“Their problems are still manageable. It’s completely different from Bear Stearns.”

Ben Bernanke objected.

I raised an eyebrow.

“Hm... First, make your decision.”

Before I could tell him what was about to happen, something more important had to come first.

Whether Ben Bernanke would take my hand or not.

Silence followed once again.

The deeper his thoughts became, the longer the silence stretched.

I played with the coffee cup in front of me and waited.

By the time the coffee had gone cold, Ben Bernanke finally opened his mouth with difficulty.

“Very well. I accept your proposal. But I have one condition.”

“Go ahead.”

“Hand over all the evidence related to Baltice. And never mention this matter again.”

“That’s not difficult. But even if I hand over my evidence, that won’t erase the evidence on your side.”

“I’ll take care of that.”

Had Ben Bernanke been preparing something himself?

Well, if the Chairman of the Federal Reserve allowed himself to be dragged around forever, there would be nothing more foolish than that.

“Fine. I’ll hand over everything I have regarding you and never bring it up again. But I have one condition as well. Fair is fair.”

“Go ahead.”

“Share everything that happens within the Federal Reserve with me from now on. And whenever an important decision must be made, consult me.”

Ben Bernanke’s eyes widened.

“What? Even David and Nace never made such demands.”

“Don’t think I’m the same as them. I’ll move the board exactly the way I want. But I can promise you one thing. Everything I do won’t differ that much from your own thinking.”

I remembered every action Ben Bernanke would take to overcome this crisis.

But remembering and hearing things firsthand were entirely different matters.

Too much had already changed from the future I knew, and I had to reduce variables as much as possible.

After hesitating, Ben Bernanke answered.

“I’ll consult you. But if you fail to convince me, I won’t change my mind.”

“That’s enough.”

We shook hands once again.

A new alliance had been formed.

After letting go, I relaxed in my chair and began speaking.

“Let’s start with Lehman. I don’t know how large you think the problem is, Chairman, but whatever you imagine, it’s bigger.”

“We estimate roughly three hundred billion.”

As expected, he had it wrong.

I shook my head.

“At least six hundred billion dollars in debt. And that’s only if they sell every asset they own. But most of Lehman’s assets are real estate assets.”

Real estate-related assets could not be liquidated quickly.

On paper, they weren’t insolvent.

But once they could no longer repay their obligations because of a liquidity shortage, bankruptcy would be inevitable.

“...Six hundred billion?”

“Yes. That’s what we’ve found. It could be even higher.”

“N-no, I’d have to see the details, but the figures Lehman submitted to us indicated debt of around three hundred billion dollars.”

“They hid it. Lehman believes they only need to hold on. You know why.”

“The bailout package...”

“Yes. They’re waiting for the bailout package currently under congressional review to pass.”

Ben Bernanke asked with a grave expression.

“Why has the scale of their losses become so massive? I simply can’t understand.”

“Greed. When institutions invested in CDOs, they usually entered CDS contracts to hedge them. But Lehman sold those CDS contracts to other investors as well. To earn even more profits. High-risk tranches offer higher returns, but naturally, they carry higher risks.”

Being a smart man, Ben Bernanke already knew where I was going.

His face turned pale.

“As the CDOs Lehman holds become impaired, the buyers of the CDS contracts Lehman sold can demand compensation from Lehman Brothers...”

“Yes. And in a few days, there will be credit event claims on one hundred billion dollars worth of CDS contracts.”

“What?”

“That’s not all. Other financial institutions have also been making enormous profits in the same way. There won’t be a single place that’s safe. The scale may differ, but the situation is similar everywhere.”

The entire crisis that began with mortgage defaults had become entangled within an incredibly complicated financial system.

Derivative products had been sold one after another to the point where even experts couldn’t accurately predict the chain reaction.

Nobody realized the risks and sold hedge products themselves.

“But an even bigger danger lies with insurance companies, including AIG. They’re the institutions with the most CDS contracts.”

“Th-that...”

Ben Bernanke couldn’t continue.

“Fortunately, insurance companies have assets they can liquidate, so they’re in better shape than other financial institutions. But it won’t be enough. They entered far too many CDS contracts. For one CDO, there are many more CDS contracts attached to it. Three at the minimum, sometimes more than ten.”

“That’s possible?”

“Human greed knows no end. As long as you pay the premium, CDS contracts can be maintained indefinitely. If the CDO never goes bad, those premiums become pure profit.”

The total amount of CDS contracts Eva had signed with Lehman Brothers was one hundred billion dollars.

They were three-year contracts with annual premiums of three percent.

That meant paying Lehman three billion dollars every year.

If nothing happened, that money would simply disappear.

“Do you understand now?”

“......”

“Fortunately, Bear Stearns was saved. JPMorgan agreed to acquire it. Correct?”

Ben Bernanke nodded blankly.

“Can Lehman be saved too? No, can you stop everything that will collapse in sequence? It may require several trillion dollars in taxpayer money. Will the public accept that?”

“How do you know all this?”

“Because the ones filing those credit event claims are investment firms I own. I predicted this long ago and prepared for it. But I thought extreme chaos was undesirable, so I waited. I no longer think that way.”

Ben Bernanke pressed his hand against his forehead.

“All the CDS contracts we hold will explode one after another over time. Can you stop them?”

“Why? Why go this far?”

“What are you asking? Money. There’s no reason not to pick up gold lying right in front of me.”

“The world economy will stagger.”

“And my pockets will become even heavier.”

“......”

“And the American economy won’t collapse. It might stumble for a while, but it will recover quickly.”

I checked my watch.

“The bailout package will pass soon. If it doesn’t, Wall Street collapses. I’ll help you with that.”

“...How?”

“The strongest opposition right now comes from Barack Obama and those following him.”

Ben Bernanke nodded.

“I’ll make them back down. Of course, they can never accept the original bill as it is. Expect some cuts.”

“I’ve already taken that into consideration.”

“Good. I’ll solve it within a few days.”

“What do I need to do?”

“Abandon Lehman and Citigroup. Focus on saving the others.”

“...So Lehman, Citigroup, and AIG were your targets?”

I curled my lips into a smile.

I hadn’t even mentioned AIG, yet Ben Bernanke immediately realized it.

“When else would we ever get the chance to covet places like these?”

“......”

“There won’t be anyone else to acquire them anyway. We’ll put JPMorgan at the front. That should reduce opposition somewhat.”

“You mean mergers and acquisitions?”

“No. We’ll strip away all the bad assets and only eat the valuable parts.”

“You’re saying we should let them go bankrupt? Then...”

Ben Bernanke couldn’t bring himself to continue.

I finished the sentence for him.

“There’ll be extreme chaos. But opportunities always come in times of crisis. And I fully intend to seize them.”

“This isn’t something I can decide alone.”

“I know. Public opinion will force things that way anyway, so just follow my lead. People already dislike what happened when Bear Stearns was rescued, don’t they? They need an example. Something to prove that moral hazard will no longer be tolerated.”

Ben Bernanke let out a deep sigh.

“I’ll observe the situation and share information.”

As expected, he refused to give a definite answer.

“That’s enough. Just share information. But if you stab me in the back... then one of us, Chairman—or me—will die.”

Ben Bernanke recoiled slightly at the chill in my eyes.

Perhaps trying to lighten the atmosphere, he changed the subject.

“By the way... what happened in Korea? Things seemed rather noisy over there.”

“A little trick Baltice pulled to keep me tied down. I’ve already cleaned everything up and returned, so there’s no need to worry. You’ll find out soon enough.”

“Understood.”

“Then let’s get up. I have another appointment, so I should get going.”

I stood up and extended my hand.

Ben Bernanke shook it.

As he tried to pull away after the brief handshake, I gripped his hand tightly and leaned closer.

“One more warning. Don’t entertain foolish thoughts. If words stop working, then eventually...”

I released his hand and smiled while brushing off his shoulder gently.

“See you next time. Don’t worry about the bailout bill.”

I turned and left the restaurant.

Even after I was gone, Ben Bernanke remained there for quite some time.

“We should move before it’s too late.”

“Yes, Boss.”

After leaving the restaurant, I headed to the safe house I had prepared in Washington.

“You’ve already arrived, Congressman?”

Barack Obama had arrived before me and was waiting.

“I just got here.”

“Please, have a seat.”

We sat facing each other.

“I just met Chairman Ben Bernanke. And we reached an agreement.”

I gave Obama an edited version of the story.

“...Lehman and Citibank are going bankrupt? Is that really possible?”

“Bear Stearns was pushed to the brink of bankruptcy. Why would those two be any different? Without help from the government and the Federal Reserve, bankruptcy is inevitable.”

Obama could only part his lips in shock, unable to continue.

“Now, please pass the bailout package.”

“With the revised bill we prepared?”

“Yes. Chairman Bernanke agreed to it as well. Convincing the Treasury Department is his job.”

“I understand. But... America really will be safe, right?”

There was anxiety in his voice.

I smiled.

“Can you imagine a world where America collapses?”

Obama shook his head.

“Neither can I. America will never collapse. Human imagination is remarkable. But America is stronger than that imagination. So don’t worry. And never miss this opportunity.”

“To devour Hillary.”