• This is a rush transcript from "Your World With Neil Cavuto," September 15, 2009. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Any minute, any hour, any day, the hammer is coming down on Bank of America. New York's attorney general is set to pounce on all of those eye-popping bonuses that the bank doled out to Merrill Lynch executives. It is all kind of water under the bridge for my next guest, Wall Street legend Joseph Grano Jr. creating quite a bit of buzz with his new book, in which he rails against this culture of scapegoating. The former UBS chief makes clear no politician wins, nobody wins deliberately making the other guy, maybe in this case businesses, look bad.

    These days, Joe says Wall Streeters need very little help doing that.

    But, in that book, "You Can't Predict a Hero," Joe says what Wall Street and Main Street need are just average everyday heroes, positive, can-do, take-charge guys. And he is kicking off that charge first on FOX. I'm delighted and honored for that.

    Joe, good to see you.


    CAVUTO: First off, on the financial crisis right now...

    GRANO: Yes.

    CAVUTO: ... we have a lot of finger-pointing. The Wall Street guys, your old friends, your current friends, always the bad guys, always the villains. What do you make of that?

    GRANO: Well, I think it is endemic in our society, and inappropriately so.

    We — we should be focused on solutions. All of this is about postmortems. Who did it? Why did they do it? How did it happen? The anniversary of Lehman, for instance, was very topical yesterday and today.

    The issue is...


    CAVUTO: We should say the failure the Lehman Brothers. It wasn't rescued.

    GRANO: Right.

    Who is focusing on solutions? And that is to me what we should be doing, not postmortems.

    CAVUTO: Nevertheless, you say that something should have been done to forestall Lehman going down the tube, whether the government acted to force a sale or a merger or a marriage. What did you mean?

    GRANO: Well, I think if you can recall that week, first of all...

    CAVUTO: Very well, Joseph, very well.

    GRANO: ... Dick Fuld felt he had enough capital. And, then, if you listened to Paulson during that week, he said two things. One, he felt that counterparties had ample time to adjust to a Lehman failure, and, secondarily, all the political pressure about the words bailout, Wall Street bailout, it was kind of politically expedient, in my view, to let it happen.


    CAVUTO: But it was unavoidable, wasn't it? I read that in a book, and I thought, well, administration at the time could have said, these are not bailouts. They would have said they were bailouts.

    I mean, you could dance on the head of a pin all day, right?

    GRANO: Look, I'm — I'm quite confident that, if they wanted to save Lehman, they could have. They could have found a buyer and kind of stopped that buyer out.

    CAVUTO: But what would that have done? Let's say Lehman were saved and didn't go belly under. Then what?

    GRANO: I think we still would have had a financial crisis. I just think it would have been a little bit more orderly.

    I think that the tsunami that the Lehman default created probably led to other bailouts. And whether or not — and I don't think anyone will ever know — to what extent we have would have gone into this credit crisis, without question, we had to avert a systemic problem. And that problem was there with or without Lehman.

    CAVUTO: All right. And you argue it was the perfect storm — I think those were the words you used — of events...

    GRANO: Yes.


    CAVUTO: ... a confluence of events unlike we have ever seen.

    GRANO: Yes.

    CAVUTO: Are we over it?

    GRANO: I don't think so. I think that there are consequences to the debt we have put on U.S. balance sheet. Our deficit is three-and-a-half times this year larger than last. We're probably guaranteeing somewhere around $20 trillion worth of debt. That's...


    CAVUTO: So, we're digging a pretty deep hole?

    GRANO: Well, a pretty dig hole we have to get out of. And we certainly don't want to legacy go down to the next generation.

    CAVUTO: What do we do? You know, I was reading your book, Joe, and I thought, Wall Street is funny beast, right? I mean, no, no government involvement, unless it's to help us, not you.


    GRANO: I don't agree with that.