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In subsequent hearings, Kanjorski put the question directly to Hank Paulson whether the figure was accurate or not. By that time, people were saying what you are saying here - that the number was in Kanjorski’s imagination, promulgated by the NY Post.

Paulson ducked the question, but more importantly, he did not say “no.”

Now, let’s put aside what was *said* and instead focus on what people *did*, since actions speak louder than words.

In the week following Sep 17/18 2008, the Fed increased the M2 supply (non-seasonally adjusted) by $110 billion, when in the prior quarter, it had increased only about $10 billion.

The Fed clearly thought something big was going on to grow M2 at that rate.

The Treasury put out the policy to backstop all money market funds as of Sep 19th, 2008.

The Fed then stepped in and accepted applications from Goldman and Morgan to become “bank holding companies” which would give them access to the discount window - that was as of 9/21/08.

Within the next month, the Fed started programs to buy short-term asset-backed commercial paper, up to hundreds of billions of same.

Kanjorski got certain details wrong in his recollection; he got the details of Treasury vs. the Fed stepping up with the “Treasury injected $105 billion” (as he recalled it, when it was the Fed and $110 billion), but there’s no doubt from the Fed and Treasury’s actions in just three days after September 17/18 that the Federal Reserve, the US Treasury and the Congress were acting in full-flight panic. There’s no doubt in my mind of that at all, because the evidence in the markets of what they did to the money supply, the absurd alphabet blizzard of programs the Fed put out, the TARP program, the “pulling a number out of the air” that Paulson did for the price tag of TARP - all showed that they were in a panic.

A number under $100 billion would not have caused full-flight panic, IMO. They’re used to pissing away tens of billions of dollars every day and night in NYC and DC. Tens of billions had been flowing out of various asset classes day after day in the week before Sep 17/18.

Hundreds of billions? In a short timeframe?

Yea, that still gets attention.

I believe that Kanjorski screwed up in that he spoke the truth when he wasn’t supposed to. As more and more details emerge of what was going on in that timeframe, it has proven to be more accurate to assume the worst level of incompetence out of Wall Street than to assume that they had any semblance of understanding of the charlie-foxtrot they lit off. The actions of the Fed, the SEC and others in this mess showed (quite amply) that the government had no clue just how interconnected this web of debt was, they had no clue what was going to happen when they let Lehman fail, they had no clue (especially academics like Bernanke) when they said that “sub-prime will be contained.”

Kanjorski appears to have a history of having made similar claims in the past, so there’s reason for taking his statements with a grain of salt. He needs to produce sources to back his claims.

I have no doubt that the Treasury and the Fed were very worried that the Lehman and Reserve Fund failures could incite a much larger run which could spread to other deposit classes and create a self fulfilling prophecy of financial collapse. That’s similar to the panic that took hold in 1930 and crashed the banking system.

But I think that they were acting proactively in order to quell panic. There’s just no evidence to support the belief that they were reacting to the sort of organized draw down that Kanjorski seems to promote.