The White House’s roster is starting to resemble Google’s list of former employees

Jeanne Kim

11 hours ago

Have Obama's people called yet?

AP Photo/Jens Meyer

At the height of the financial crisis, the White House frequently found itself turning to veterans of Goldman Sachs to tackle the emergency, leading to the firm’s nickname: Government Sachs. Of course this was no accident, as then-US Treasury secretary Henry M. Paulson Jr. was a Goldman alum.

Now, with the spectacular initial failure of the healthcare.gov website having focused the White House’s attention on technology issues, the Obama administration is looking to another pool of private-sector talent—Google’s—for people willing to bring their professional expertise to new jobs with the government.

Megan Smith, a Google executive, is said to be the White House’s top candidate to serve as the country’s chief technology officer, replacing Todd Park, who has a healthcare information technology background and will work for the administration as an adviser based in Silicon Valley. Park recently helped bring another Google veteran, Michael “Mikey” Dickerson, to a new area of the executive branch, the US Digital Service.

Google’s expanding diaspora in Washington has sparked growing concerns about the company’s influence with government officials. Just as the Treasury Department’s actions in 2008 had implications for Goldman Sachs, many of the questions before federal agencies and lawmakers today, from net neutrality rules to the potential for regulating drone deliveries and self-driving cars, could be significant to Google’s businesses. Some of the ex-Googlers hired by the White House already have returned to the private sector; that’s understandable—not every recruit, especially those who left families behind in Silicon Valley, wants to make a lifelong commitment to Washington, or to the government’s pay scale—but the revolving door action makes critics all the more skeptical about the relationships between companies and federal offices.

Megan Smith

She’s not part of the White House yet, but Smith would be the third person—and first woman to hold the title of US chief technology officer if she gets the job. Her ascension would represent a major milestone for women in the tech industry. Back at Google, Smith is vice president of Google’s X lab and played a key role in the development of Google Earth. Previously, she was the CEO of Planet Out, an online media company catering to gay and lesbian audiences.

Michael “Mikey” Dickerson

Dickerson—currently the administrator of the new US Digital Service—was pulled into public service when healthcare.gov, an integral piece of the Obamacare health insurance system, ran into trouble. At Google, Dickerson was a site reliability engineer and part of the team that helped Google’s servers run smoothly. His task now: work with the federal government’s IT teams to improve the functionality of government websites. He’s already made waves for turning the West Wing into a business casual zone. Administration officials probably don’t care what he’s wearing to the office so long as he prevents another healthcare.gov-style embarrassment from occurring.

Katie Jacobs Stanton

Before being lured back to the private sector in 2010 for a job at Twitter, Stanton was part of the White House staff as director of citizen participation, tasked with furthering engagement with the public through new media. (She then spent seven months at the State Department before going to Twitter, where she recently changed roles from vice president of international markets to VP of global media.) At Google, she managed products like Google Finance, Google News, and Blog Search, and was involved in new business development. Stanton helped develop Google Moderator, which allowed users to submit questions for the presidential debates when Obama was running in 2008. Stanton’s resume also includes a stop at Yahoo, and a fellowship at the US Senate Committee on Foreign Relations.

Andrew McLaughlin

McLaughlin, formerly Google’s head of global public policy, worked on Obama’s transition team in 2008 and 2009 and spent two years as the administration’s deputy chief technology officer. He advised the president on a wide range of topics, from cybersecurity and online privacy to entrepreneurship and the creation of open technology standards. In 2010, he was reprimanded for exchanging emails with former colleagues still at Google to discuss issues under his purview as a government official, in violation of the administration’s ethics rules. He left the White House the next year; now he’s a partner at the startup studio betaworks and is the CEO of Digg.

Nicole Wong

Although Wong (nicknamed “The Decider“) apparently has decided to leave the White House to return to her family in California, her background in internet law and privacy issues made her a strong pick as the administration’s deputy chief technology officer amid growing public concern over government data collection. Formerly the legal director at Twitter, she helped author a White House report on big data (pdf), which was released in May, and worked on policies regarding privacy and US intelligence. Not only was Wong a vice president at Google, she was deputy general counsel for the company, and testified before Congress (pdf) about Google’s adherence to privacy laws.

Sonal Shah

The former head of global development at Google.org, the company’s philanthropic arm, Shah served in the White House from April 2009 to August 2011 as head of the Office of Social Innovation, aiding nonprofits and entrepreneurs in tackling important social issues. Now she’s at Georgetown University, with the Beeck Center for Social Impact & Innovation. Prior to working at Google, she was a VP at Goldman Sachs.

Eric Schmidt

While Google’s chairman and CEO, Eric Schmidt, doesn’t have a formal position in the White House, he was a strong supporter of Obama’s in 2008 and his ties with the administration remain strong. He reportedly advised Obama’s 2008 campaign in the areas of tech and energy and was on hand again as an informal adviser during the 2012 race.


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Andrew Sorkin's 'Inside Story' On Financial Collapse

Georgetown Global Forum
In 2007, the World Economic Forum named Andrew Ross Sorkin a Young Global Leader.

Andrew Sorkin's 'Inside Story' On Financial Collapse

Financial journalist Andrew Ross Sorkin discusses his investigation into what really happened one year ago during the financial collapse and bailout. ...
(October 20, 2009)
http://www.npr.org/templates/story/story.php?storyId=113938903

Currently on NPR's "Fresh Air" ...

........................................................ The Story:

Andrew Sorkin's 'Inside Story' On Financial Collapse
October 20, 2009

Audio for this story from Fresh Air from WHYY will be available at approx. 3:00 p.m. ET
Transcript

October 20, 2009
Financial journalist Andrew Ross Sorkin talks with Fresh Air host Terry Gross about his investigation into what really happened one year ago, during the financial collapse and bailout. It's an epic tale that's he's documented in a new book: Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Themselves.

Sorkin is the award-winning chief mergers and acquisitions reporter for The New York Times, where he also writes a column and serves as assistant editor of business and finance news. He founded and edits DealBook, the Times' multimedia financial journal.

Source: http://www.npr.org/templates/story/story.php?storyId=113938903

As Goldman Gloats, What Does It Matter For Us?

Mark Lennihan/AP
Goldman Sachs headquarters, in New York. The Wall Street firm again showed its trading prowess, helping it earn more than $3 billion in the third quarter.

by Russell Roberts
October 16, 2009

Listen to the Story
All Things Considered
[3 min 50 sec]

October 16, 2009

Should we care about Goldman's profits and compensation? It's pretty gauche when your take-home pay is millions of dollars while some of your neighbors can't find work. But is it wrong? Is it something those of us on the outside should care about?

Normally, I'd say it's nobody's business. What people get paid is best left to the marketplace.

But Goldman Sachs is different because those of us on the outside are really on the inside. Goldman Sachs was propped up with our money. Not the money it took directly from the government and paid back. The money that AIG gave it that really came from the taxpayer.

Goldman Sachs being proud of its performance this year is like the Harlem Globetrotters bragging that they went undefeated. It's not really a normal competition.

Goldman Sachs played the same game as Bear Stearns and Lehman Brothers — they made lousy investments financed with borrowed money. When the assets fell in value, Bear and Lehman died. They were reckless with other people's money.

But Goldman Sachs is still here, Why?

Part of the reason is that maybe it took a little less risk and maybe hedged against that risk a little better. But part of the reason Goldman lives and thrives is that the government bailed out AIG. Almost 13 billion dollars of the money the government sent to AIG went out the door and over to Goldman Sachs. This money included loans and insurance Goldman bought on its bad bets. Some of that insurance turned out to be a bad bet, too. But Goldman didn't bear the cost. The taxpayers did.

Part of the reason Goldman and other Wall Street firms made so many bad bets is they knew they might be rescued. And most of the time, they were.

The rescue of large financial institutions is justified as a way to save the system and protect Main Street from a tsunami of financial instability.

Russell Roberts is a professor of economics at George Mason University and a research scholar at Stanford University's Hoover Institution. He hosts the weekly podcast EconTalk.org

But capitalism is a profit-and-loss system. The profits encourage risk-taking. The losses encourage prudence. If the taxpayer almost always eats the losses for the losers, you don't have capitalism. You have crony capitalism.

The latest rescue of Wall St has taken hundreds of billions of dollars from average Americans and given that money to some of the richest people in human history, people who made bad bets and should have been taking enormous losses. Instead, they've been taken care of. Their triumph makes Bernie Madoff look like a small-time operator.

The key policymakers, Henry Paulson, Ben Bernanke, and Timothy Geithner, have been praised for keeping things afloat. But to what purpose? What's the virtue of saving crony capitalism? Maybe they prevented an even worse recession.

There's no way of knowing. But they have deeply damaged both capitalism and democracy.

We have a financial system that not only rewards cronies and encourages recklessness. It also funnels precious capital into areas like the housing sector instead of into more productive investments.

We have to stop rescuing the reckless. We have to let people who make bad decisions bear the consequences.

Profit and loss. The rest of us live that way. Wall Street can too.

Russell Roberts holds the Smith Chair at the Mercatus Center at George Mason University, where he is also professor of economics. He is a research scholar at Stanford University's Hoover Institution and the host of the weekly podcast EconTalk.org.

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Source: http://www.npr.org/templates/story/story.php?storyId=113841487

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Please, Annie Liebovitz Is Not The Victim Of Predatory Lending

Joe WeisenthalAug. 17, 2009, 3:30 PM

We haven't followed too closely the controversy around Annie Liebovitz's personal finances, or the circumstances that may cause her to go broke and lose the rights to her entire body of literature.

Felix Salmon -- who knows both the worlds of finance and art quite well -- has been on top of it, and notes a new development involving Goldman Sachs (GS), which apparently owns a piece of the loan provided to Liebovitz by Art Capital.

While Art Capital is eager to tighten the screws on Liebovitz, Goldman Sachs (whose reputation is in need of repair) has no interest in being portrayed as the company that seized Liebovitz's entire collection. So they're dragging their heels.

But here's the part of Salmon's writeup that's really baffling:

Allow me to make the subtext explicit. Art Capital talked Annie Leibovitz into signing a draconian agreement — one which she was all but certain to be forced to default on. The terms were onerous enough to begin with, since they gave Art Capital sole right to sell any of Leibovitz’s work while any of the loan was still outstanding and for two years thereafter. But the terms become really predatory if and when Leibovitz defaults, to the point at which Art Capital expects to make an annualized return on its investment in the 40% to 50% range.

Art Capital did not, however, simply have $24 million lying around when it extended the loan to Leibovitz. As a result, it sold part of the loan to other investors, including Goldman Sachs. And Goldman Sachs, while it’s happy to make lots of money, does not want to be painted as a predatory lender. So Goldman is now Leibovitz’s best hope: if Goldman can buy out Art Capital, it might be able to come to a more Annie-friendly agreement.

Sorry, but this Annie Liebowitz-as-victim-of-predatory-lending line just doesn't pass the smell test.

The idea of predatory lending kind of makes some sense when you're talking about mortgage brokers foisting $350K mortgages on minimum wage earners, though even then, the brokers were profiting by exploiting the stupidity of banks. (We're not asking anyone to feel sorry for banks here, mind you. We're just saying).

But Annie Liebovitz is an educated, professional woman. When Felix Salmon says "Art Capital talked Annie Leibovitz into signing a draconian agreement," are we really to believe that Liebovitz was unable to hire her own financial advisors to look over the after? After all, we're talking about $24 million here. Why did she just agree to it willy-nilly without any advice? This is a gigantic financial decisions here. You can't just talk someone into a loan at this level, or you shouldn't have been able to. And Liebovitz, when faced with a huge financial choice, and the self-knowledge that she's just a photographer, should have known not to make such a big decision alone.

Examples like this really do turn the idea of predatory lending on its head.

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Source: http://www.businessinsider.com/please-annie-liebovitz-is-not-the-victim-of-predatory-lending-2009-8

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Bank Bonus Tab: $33 Billion

JULY 31, 2009

Nine Lenders That Got Government Aid Paid at Least $1 Million to 5,000 Employees

By SUSANNE CRAIG and DEBORAH SOLOMON



Andrew Cuomo






Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.

The data, released Thursday by New York Attorney General Andrew Cuomo, provide a rare window into the pay culture of Wall Street, where top employees typically make 90% or more of their compensation in year-end bonuses.

The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million.

Overall compensation and benefits at the nine banks fell 11%, to $133.5 billion in 2008 from $149.3 billion in 2007, the Cuomo report said. But with net revenues falling, the percentage of the firms' revenues dedicated to compensation rose to 45% last year from 41% in 2007.

The report reignites long-simmering anger, on Capitol Hill and beyond, over big Wall Street payouts. The nine firms in the report had combined 2008 losses of nearly $100 billion. That helped push the financial system to the brink, leading the government to inject $175 billion into the firms through its Troubled Asset Relief Program.

The chairman of the U.S. House investigative panel, New York Democrat Edolphus Towns, called the pay figures "shocking and appalling" and announced a hearing into compensation practices at banks.

The White House was more muted. "The president continues to believe that the American people don't begrudge people making money for what they do as long as...we're not basically incentivizing wild risk-taking that somebody else picks up the tab for," said White House Spokesman Robert Gibbs.

More
Read the full report from the New York Attorney General's office.
Deal Journal
What Are Your Chances of Being a Millionaire?
Bonus Breakdown From Cuomo's Report



"These pay packages are pretty outrageous," said Michael Baldock, a partner at Stamford, Conn.-based boutique bank Ondra LLP, who has worked at a number of big investment banks. "But if you generate $10 million in revenue a year, another firm will always want that revenue and be willing to pay for it."

In releasing the report now, New York Attorney General Cuomo is vaulting ahead of federal efforts to assess and curb excessive pay. The office has been among the first to investigate and bring charges on several Wall Street abuses this decade.

The House of Representatives is preparing to vote as early as this week on a bill that would give shareholders nonbinding say on pay packages and give regulators more tools to prohibit risky pay practices at banks and other regulated financial firms. The Senate isn't expected to vote on the legislation until the fall.

The Obama administration, meanwhile, is preparing to vet pay at firms receiving "exceptional assistance" from the government. Institutions have until Aug. 13 to submit proposed compensation details for the 100 highest-paid employees at each. The proposals will be reviewed by the Treasury Department's pay czar, Kenneth Feinberg.

Andrew Williams, a Treasury spokesman, said Mr. Cuomo's report "focuses on strengthening the link between pay and performance -- a goal that we share."

Mr. Cuomo said Thursday he hopes his report will prompt the financial firms themselves to significantly overhaul their pay system to reward long-term performance rather than short-term gains. His report didn't release names of individual bonus recipients because of privacy concerns.

"The banks say they pay for performance," Mr. Cuomo said of the data. "Yet in 2008 there was no performance and they still continued to pay out huge sums of money."

Wall Street has shown little sign of slowing down the pay train this year. Goldman Sachs Group Inc. and Morgan Stanley recently disclosed that they have set aside $11 billion and $6 billion in compensation and benefits respectively for their employees so far this year. Goldman's second quarter was among its best ever. Morgan Stanley lost money for its third straight quarter.

Goldman and Morgan Stanley declined to comment on the report.

Meanwhile, some big banks that received government bailouts, including Citigroup Inc. and Bank of America Corp., are offering handsome pay packages to lure stars. Citigroup -- which received about 25% of the aid going to the nine banks -- has the No. 1 pay recipient. Andrew Hall, the trader who heads Citigroup's energy-trading unit Phibro LLC, received $98.9 million in 2008, according to a government official. Citigroup CEO Vikram Pandit, by comparison, received more than $38 million last year.

An early test for Mr. Feinberg will be the pay of Mr. Hall, whose profit-sharing contract with the bank could again entitle him to as much as $100 million, say people familiar with the matter.

James Forese, Citigroup co-head of global markets, cited Phibro's "consistent track record of profitability" and said its contracts directly align compensation with performance. "That said, we are sensitive to the need for a full review of compensation practices in our industry," he said. "We are evaluating the best way forward for stakeholders."

The group of nine's No. 2 bonus for last year, according to a government official, was the $39.4 million that went to Bank of America's Thomas Montag. In 2008, Mr. Montag was sales and trading chief at Merrill Lynch, which got crushed by billions of dollars in mortgage-related losses and was sold last year to Bank of America. Mr. Montag's pay package included stock grants, which since have fallen in value.

Bank of America said bonuses for Merrill Lynch were shared among 30,000 employees and Bank of America's figures cover more than 200,000 employees.

The study found that pay at the banks remained near previous levels despite revenue declines. Merrill's net revenue fell by $23 billion in 2008, leading to a huge net loss. The firm's pay and benefits dropped by $1.1 billion, or 7%, according to the study. At Citigroup, revenue fell by $28 billion, or 34%. Pay and benefits dropped $2 billion, or 6%.

Similarly, at Goldman and J.P. Morgan Chase & Co., pay fell less sharply than revenue in 2008. Both firms have paid back the government loans they received under TARP.

J.P. Morgan declined to comment on the report.

Goldman, Morgan Stanley and Merrill, Wall Street's three largest securities firms in 2008, paid nearly $13 billion in bonuses last year, the report says. That was roughly one-third of their total pay and benefits of $38 billion, according to securities filings.

J.P. Morgan topped other banks in the number of employees receiving $1 million or more -- 1,626 out of its 224,961 employees. This figure includes bonus, salary and options; the numbers of other banks in the study includes bonuses only.

J.P. Morgan's top earner collected $29 million, more than James Dimon, the firm's chief executive, who received $19.7 million in total compensation last year.

Goldman paid the most per employee, about $160,000 each for more than 30,067 staffers. Some 212 Goldman bankers made $3 million or more. Goldman, which weathered the credit crisis better than most rivals and made $2.3 billion in 2008, also produced the most revenue per employee, $77,228.

Goldman has said that no partner got a bonus of more than $222,500 in cash. The rest was paid in deferred stock, with an extra year of service required for any of it to vest.

Morgan Stanley had 428 employees who received bonuses of $1 million or more. In addition, 10 people received bonuses of $10 million or more, for a combined $146.8 million.

Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp. round out the nine banks. Each declined to comment.

—Aaron Lucchetti, Daniel Fitzpatrick and Robin Sidel contributed to this article.
Write to Susanne Craig at susanne.craig@wsj.com and Deborah Solomon at deborah.solomon@wsj.com

Printed in The Wall Street Journal, page A1





Source: http://online.wsj.com/article/SB124896891815094085.html

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P.S. What do people expect?

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The whole Bail-Out concept is a fraud and a travesty of law.

Who lends the Treasury the BILLIONS, so they can in turn lend it to the Banks?

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It's the Federal Reserve, right?

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Well, who is the Federal Reserve? A conglomerate of Banks. Some of which are the same banks to whom the billions of Bail-Out Dollars went to.

Such as JP Morgan Chase, CitiCorp, etc.

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It's like the snake swallowing its tail. It's a win-win propositon.

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Except, that in this case the taxpayers are left holding the bag, in debt with astronomical figures for ages to come.

No Bail-Out's for them, no BILLIONS, just bills for ever!

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Meanwhile, the Banks "laugh all the way to the bank".

What a sham! What a scam!

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Yet, they say: Make mine Bud-Light!

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YEAH, VERY LIGHT, INDEED.

I'M BEGINNING TO SEE, THE LIGHT!

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666: Goldman's latest bonus bears the mark of the beast

Something strange is stirring. Even the young are joining the chorus of concern that this tarnished giant is part of a financial oligarchy that holds the US in its grip, writes Stephen Foley in New York

Sunday, 3 May 2009

Something strange is afoot when Popbitch – provider of a weekly email beloved of students, stuffed full of celebrity tittle-tattle and links to the silliest miscellany of the web – breaks off from such glorious trivia to encourage readers to support GoldmanSachs666.com, a deadly serious website measuring the political tentacles of the mighty investment bank.

Something strange, too, when Simon Johnson, a former chief economist at the International Monetary Fund, becomes a hero of the internet and the satirical comedy-show circuit on cable TV, promoting his theory that the US is in the grip of a financial oligarchy.

The credit-market catastrophe that has plunged the world into recession is everywhere stirring new ways of thinking about how banking relates to the wider world, but nowhere more so than among a generation coming into political consciousness in these searing times. Something is brewing, some argue, that could make the "regulatory-financial complex" something to rail against in the same way that the military-industrial complex was in the Cold War.

And for all the impression it is giving that it has survived the credit crisis with its pre-eminent position on Wall Street intact, this should worry Goldman Sachs. More so than any other firm, it exists at the intersection of politics and high finance, and therefore has most to lose if this nascent movement turns it into the next ExxonMobil or Wal-Mart – firms whose every move could attract protest, and whose reputation could take years to repair.

"It was listening to the news coming out of AIG that got me fired up," says Mike Morgan, founder of GoldmanSachs666.com. "While politicians were screaming about $165m paid out to AIG executives in bonuses, $180bn was walking out the door."

Goldman, incidentally, has abandoned its attempts to shut the site down.

Mr Morgan is referring to the government bailout of AIG, whose collapse would have sent shockwaves through the markets. The Federal Reserve and the then-treasury secretary, Hank Paulson, decided to funnel public funds to AIG, and its counterparties were paid in full. You don't have to scratch far into the internet to find conspiracy theories: Mr Paulson was chief executive of Goldman before going into government; he appointed Edward Liddy, formerly of Goldman, to run AIG; Goldman was AIG's biggest counterparty, receiving $12.9bn from AIG after the bailout. (It says it was hedged and would not have lost even if AIG did go under.)

Mr Morgan is not the sort of young hot head you find protesting against the G8. He is a 53-year-old registered financial adviser from Florida, but he has attracted a handful of volunteers to beef up the website and to amass information on the Goldman alumni network and its power. "Goldman dipped into taxpayer funds via AIG," he says. "Who gets paid off 100 cents on the dollar these days? Only Goldman it seems. It is all about looking at the connections. Where do all the Goldman Sachs executives go? I see them as running the world. They are like the Standard Oil of the last century, too big and too powerful, with people flocking from Goldman to government and from government to Goldman."

It is a point that is being made forcibly by a growing number of people, from the lowliest bloggers to the most respected economists. Mr Johnson's claims of oligarchy are echoed by Nobel Prize winner Joseph Stiglitz, for example, and the notion is going mainstream. The New York Times devoted acres to a forensic investigation of Tim Geithner's diary from when the Treasury Secretary was running the New York Federal Reserve and appeared to have what it claimed were "unusually close ties with Wall Street executives", including those at Goldman Sachs and Citigroup, thanks to his mentor, Robert Rubin, a former treasury secretary who has been a senior figure at both banks.

Goldman has swung into action to try to arrest a public-relations nightmare in the making, and its chief executive, Lloyd Blankfein, knows precisely what is at stake. He has been most outspoken among Wall Street bosses in speeches and newspaper op-ed columns about Wall Street's need to change. At a speech to the Council of Institutional Investors last month, he said the disasters of the past year have been "humbling", and that pay practices on the Street look "self-serving and greedy in hindsight". He has argued that bonus practices should be changed, to reflect longer-term performance rather than one-year profits, which we all now know can be wiped away in future years. But reducing the psychological primacy of the bonus culture on Wall Street does not appear to be on his corporate agenda, and Goldman's first-quarter results revealed it was setting aside $4.7bn (£3.2bn) to pay salaries and bonuses for the quarter – 18 per cent more than in the same period a year ago, despite a 7 per cent fall in the number of staff.

"It is not about what you say, it is about what you do," says Anthony Johndrow, the managing director of the Reputation Institute, a New York consultancy. "Financial services firms cannot simply run a warm and fuzzy PR or ad campaign. The challenge is to find a way to make a statement and to address the trust that has been violated, to promise action that proves the company 'gets it'. The authentic enterprise takes responsibility for its actions and their impact."

Authenticity has become one of marketing's hottest concepts. Advertising executives insist that any message that does not reflect what a company really stands for is doomed to backfire. In the PR world, the "authentic enterprise" is one that understands how changing its image requires changing the fundamental way it does business. For Goldman, its reputation on Wall Street is that it is the smartest, best-connected and most lucrative place to be. Beyond Wall Street, is that enough to satisfy?

Mr Johndrow's Reputation Institute has just conducted research that suggests it is not – far from it. In its annual survey of the public reputation of 153 of the biggest companies in the US, released a few days ago, Goldman has plunged into the bottom six, in with oil companies and Dick Cheney's old oil-services firm, Halliburton. The survey gives a score based on public ratings of the trust and good feelings they have for each firm, and Goldman's rating fell 17 per cent. Only AIG's fell more.

Goldman Sachs's spokesman, Lucas van Praag, says: "We think our reputation is critically important, particularly in our hiring activities. The Reputation Institute survey is mainly focused on retail brands and we are not a retail firm. Although we were disappointed, we were not particularly surprised."

Mr Johndrow explains: "The world of Wall Street is a small world, and up to now it seems executives have considered that the reputations of the banks only really matter to a few people within that world. The reputation of Goldman Sachs versus, say, Credit Suisse, is the most important thing, and its regard for the general public as a stakeholder has been minimal. But now the public has a stake as taxpayers, yet the banks have not yet done anything to acknowledge what that means."

Reputation is an "intangible asset" whose diminution could have profound business consequences, he adds. Public fury can quickly be channelled through politicians into harsh new regulations and restrictions.

And it could, ultimately, hit Goldman's ability to attract the brightest graduates. As Mr Johndrow explains: "When you go back to your home town or your school, it stops being about how many expensive cigars and yachts and mansions you have. Justifying your job involves talking about its wider impact on society."

Source:http://www.independent.co.uk/news/business/analysis-and-features/666-goldmans-latest-bonus-bears-the-mark-of-the-beast-1677853.html

The Fed has been forced to seek risk while other central banks seek safety

Posted on Saturday, November 15th, 2008

By bsetser

A global slowdown — likely a severe global slowdown — is now underway. Last week’s data erased any real doubt. US retail sales are down. US real goods exports fell in September, and the October ports data (and woes with trade finance) suggest that hope isn’t on the way. The dollar’s rally also won’t help — but that will only hit with a lag. Europe is slowing. Britain is slowing far more. And China is too.

Wang Tao of UBS argues — I suspect correctly — that the weak data on industrial production stems more from a fall in domestic activity, especially a fall in construction that reduced demand for steel and cement, than from a fall in exports. But if the polls on Americans holiday purchasing plans are accurate, exports are going to fall sharply. And this time it won’t just be the garment and toy factories that feel the pain; some of China’s newer export sectors (the ones that have kept y/y nominal export growth at 20% … ) will slump too.

It isn’t a pretty picture. But if nothing else it clarifies the need for strong policy action to offset what now looks to be a sharp and quite sudden fall in private demand.

The Fed’s balance sheet isn’t any prettier. Week after week it continues to expand. As jck of Alea notes, the Fed’s leverage ratio puts Goldman Sachs and Morgan Stanley to shame. Of course, the Fed could always get more capital if it needed it. But the rise in the Fed’s leverage illustrates how it has facilitated the deleveraging of other parts of the financial sector. If it hadn’t acted, things could be worse. Really.

And for all the talk of how foreign central banks are intrinsically stabilizing forces in the market, the real heavy lifting has all been done by the Fed (with a bit of help from the Treasury). The world’s reserve managers may have been a stabilizing force in the currency markets in the third quarter — we will have to see what the IMF’s COFER data tells us (and read the tea leaves to guess what China has been doing; to stabilize the market it should be stepping up its purchases of euros, pounds and Australian dollars … ). But they clearly haven’t been a stabilizing force in the US credit market. In the first two weeks of November they added over $30 billion to their Treasury holdings at the New York Fed while continuing to scale back their Agency holdings. Paul Swartz of the Council’s Center for Geoeconomic Studies (check out its coverage of the Leaders 20) and I tried to illustrate how the Fed has been taking on credit risk even as other central banks have pulled back.

We plotted the y/y change in the Fed’s holdings of Treasuries (including Treasuries that have been lent out through the Fed’s securities lending facility) against the y/y change in foreign central banks holdings of Treasuries and Agencies. There is little doubt that Fed has been selling Treasuries — and other central banks have been big buyers.

It some sense, the Fed hasn’t just been facilitating the deleveraging of bank balance sheets. It also has facilitated a large and fairly sudden change in the composition of the balance sheets of foreign central banks, who have shifted out of Agencies toward Treasuries. Remember central banks were net sellers of reserves in October, so the recent shift toward Treasuries implies sales of other less secure assets.

Two additional points.

First, the New York Fed’s custodial holdings seem to capture about 90% of central banks holdings of Agencies, but more like 2/3s or 3/4s of central bank holdings of Treasuries — so total central bank purchases of Treasuries over the past year could be even higher than the now close to $400 billion increase implied by the Fed’s custodial accounts.

Second, we didn’t plot the surge in Treasury issuance associated with the supplementary financing account, i.e. the Treasury bills that have been sold to provide the Fed with additional funds to lend out to the financial sector. We just looked at what happened to the Treasuries that the Fed held a year ago as assets on its balance sheet. The amazing thing is that the Fed in effect needed to sell even more Treasuries that in held on its balance sheet (about $559 billion more) to finance its lending to the global financial system during this crisis.

This entry was posted on Saturday, November 15th, 2008 at 2:51 pm...

Source: http://blogs.cfr.org/setser/2008/11/15/the-fed-has-been-forced-to-seek-risk-while-other-central-banks-seek-safety/#more-4058

Treasury to Invest in `Healthy' Banks, Kashkari Says (Update4)

By Rebecca Christie and Robert Schmidt

Oct. 13 (Bloomberg) -- Neel Kashkari, the U.S. Treasury official overseeing the $700 billion rescue of the financial system, said government equity injections will be aimed at ``healthy'' firms.

``We are designing a standardized program to purchase equity in a broad array of financial institutions,'' Kashkari, who heads the department's Troubled Asset Relief Program, said in a speech in Washington. ``The equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions.''

U.S. officials are hurrying to address frozen credit markets that led France, Germany, Spain, the Netherlands and Austria to agree to commit $1.8 trillion to guarantee interbank loans and take equity stakes in banks. Buying shares of financial institutions has become the latest focus of Treasury Secretary Henry Paulson's rescue plan.

``While the U.S. tends to shy away from nationalizing or even partially nationalizing its financial institutions, it would appear that it has no choice but to follow suit,'' Win Thin, a senior currency analyst with Brown Brothers Harriman & Co. in New York, said in a research note today.

Paulson and Federal Reserve officials met today with executives from financial companies to discuss the government plan to restore confidence in credit markets, the Treasury said. The Standard & Poor's 500 Index soared 11.6 percent, the biggest rally in seven decades.

`Multiple Directions'

Kashkari said the Treasury will ``attack'' bad debt clogging financial markets from ``multiple directions.'' His remarks gave the first detailed progress report on the operations of the financial rescue plan since President George W. Bush signed it into law on Oct. 3.

Three firms are finalists to be the Treasury's ``master custodian,'' to be announced in 24 hours to serve as the prime contractor, Kashkari said. The Treasury has tapped law firm Simpson Thacher & Bartlett LLP and investment consultants Chicago-based Ennis Knupp & Associates for roles in the program. More selections are expected in coming days, he said.

``We are working around the clock to make it happen,'' Kashkari told the Institute of International Bankers.

Kashkari, 35, is a former Goldman Sachs vice president who has been one of Paulson's key aides on housing issues since July 2006. He currently serves as an assistant secretary for international economic issues, although his responsibilities have been delegated to another assistant secretary, Clay Lowery, while Kashkari works on the program, called TARP.

Bernanke's Oversight

Paulson has said Kashkari will serve as the interim head of the program while the Treasury searches for a permanent executive. In the speech, Kashkari said Fed Chairman Ben S. Bernanke will lead TARP's oversight board. That panel, which met for the first time last week, also includes Paulson and the heads of the Securities and Exchange Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development.

In addition to the stock-buying effort, other components of TARP include a whole loan purchase program, a mortgage-backed securities purchase program and an insurance program for those securities.

He outlined three possible scenarios: ``One, an auction purchase of troubled assets; two, a broad equity or direct purchase program; and three, a case of an intervention to prevent the impending failure of a systemically significant institution,'' he said.

Kashkari said the Treasury plans to use its broad powers under the new law. ``Treasury worked hard with Congress to build in this flexibility because the one constant throughout the credit crisis has been its unpredictability,'' he said.

Debt Guarantees

Kashkari did not mention debt guarantees in his speech. Paulson's team also is speeding up consideration of guaranteeing debt issued by banks after a similar move by European policy makers, according to a U.S. official briefed on the matter.

Executive compensation restrictions, required by Congress for participating firms, will take different forms depending on how financial institutions use the program, Kashkari said.

Oversight and compliance efforts already have started, Kashkari said. The Treasury is working with the Government Accountability Office and looking for a special inspector general, as required by the law.

Firms that bid on TARP program jobs will have to disclose and address their potential conflicts of interest, Kashkari said. The Treasury will conduct an independent evaluation before making its financial decision, he said.

Conflicts of Interest

``Taking aggressive steps to manage potential conflicts of interest is essential because firms with the relevant financial expertise may also hold assets that become eligible for sale into the TARP,'' Kashkari said.

The Treasury has received hundreds of applications from firms seeking to be the asset managers for securities and whole loans. For both categories, the Treasury expects to make a selection within the next few days, Kashkari said. Two accounting firms will be selected in coming weeks, he said.

Paulson has tapped an interim leadership team for the rescue program while permanent staff are recruited, Kashkari said, naming five of the new hires.

Reuben Jeffery, undersecretary of State for economic affairs, will be the TARP's chief investment officer. Jeffery spent 18 years at Goldman Sachs.

Jonathan Fiechter, deputy director of the International Monetary Fund's monetary and capital markets director, will be interim chief risk officer for the new program.

Donald Hammond, a former Treasury career official who is now deputy director of the Fed's payments division, will be interim chief compliance officer.

Thomas Bloom, on loan from the Office of the Comptroller of the Currency, will be interim chief financial officer.

Donna Gambrell, head of the Treasury's Community Development Financial Institutions Fund, will lead the program's efforts to preserve homeownership.

To contact the reporter on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net.

Last Updated: October 13, 2008 16:29 EDT

Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAHSY.n9BG0c

Oil prices: Buckle up for a wild ride

Outlook for crude depends largely on the health of the global economy. Analyst predictions range from a fall to $50 or a surge to $150 a barrel.

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: October 8, 2008: 1:48 PM ET


NEW YORK (CNNMoney.com) -- Expect nothing but volatility for oil prices over the next year or two - with the fate of the global economy largely dictating whether crude will fall to $50 or shoot up to $150 a barrel.
The global economy is teetering on the edge, and no one really knows if it will muscle through this credit crunch or succumb to a pronounced recession.
With crude prices so closely linked to the health of the economy - unemployed people tend to drive a lot less - oil analysts don't really know where oil prices are headed either.
The case for $50
Oil prices have fallen over 40% since July and are currently trading around $86 a barrel, but if the $700 billion government bailout for financial sector doesn't work and the world's economy plunges into a serious recession prices could still fall further - as low as $50 a barrel.
With the U.S. stock market's steep losses following the approval of the economic bailout plan, and bank failures in Europe prompting a $350 billion-plus bailout in Britain and talk of more to come across the Continent, it's a scenario that shouldn't be quickly discounted.
"Should we enter a synchronous global recession...oil prices could fall further to $50 a barrel next year," Francisco Blanch, head of global commodities research for Merrill Lynch, wrote in a recent research report.
Blanch doesn't think such a recession is likely, nor does Citigroup futures analyst Tim Evans.
But in the event of a deep global recession, Evans also said "The market would find value at $50 a barrel."
The global recession scenario only exaggerates the trend of falling demand seen recently.
In the United States it's been quite dramatic. Oil demand fell over 6% in July, according to the Department of Energy. Europe has also witnessed a drop in demand, while in the red hot economies of China and India oil use is growing slower than previously thought.
Evans said the main causes for the U.S. decline weren't the slowing economy, but government policies promoting biofuels and greater fuel efficiency, as well as consumers buying more efficient cars and driving less.
"This is not a token shift," he said. "There is hard work that goes into decreasing demand by that extent."
Plus, this decline in demand is coupled with an expected increase in supply.
Merrill estimates new OPEC investments will boost production capacity by 3 million barrels a day - or nearly 4% of current world output, over the next 18 months.
This picture of falling demand and rising supply - coupled with a strengthening dollar and investor flight from oil futures - has led to oil's rapid decline in price over the last couple months.
The case for $150
Now, if the bailout works and a global recession is averted and the world's economies come roaring back to life, dreams of $50 oil will certainly be dashed.
Crude would once again run into the same supply and demand scenario that helped push it to nearly $150 a barrel this July - namely, growing demand from the billions of people in China and India gaining middle class lifestyles butting against a global oil industry that struggles to produce much more than the current 85 million barrels a day.
It's this scenario that caused oil bulls like Goldman Sachs and Boon Pickens to to declare as recently as July that we'll likely see $150-$200 a barrel oil in the next year.
Even post credit crunch, Goldman is still predicting oil to average $110 a barrel in 2009.
"Investors appear to be placing greater weight on the demand concerns rather than the supply shortfalls," Goldman said in a research note.
If the U.S. goes through a mild recession, but the world economy chugs along and eventually heats up, oil is likely to trade back in the triple digits at some point in the next couple of years, according to Merrill's Blanch.
The bank bailout is likely to cause higher inflation as massive amounts of cash enters the market - pushing up oil prices as investors buy it as a hedge.
But again, analysts turn back to strong demand and tight supplies once economies pick up speed.
"As economic activity starts to recover in the emerging markets, their energy demand will likely start to strengthen again," wrote Blanch. "Energy and commodity demand growth is a secular investment theme that probably has decades to run."
The middle road
With so much uncertainty, it's not surprising that most analysts are taking a middle-of-the-road approach, predicting prices somewhere in the $70 to $100 range for 2009.
This is predicated on the expectation of a middle-of-the-road performance for the economy.
Most economists see the U.S. economy slumping into an official recession in the later part of 2008 and the first part of 2009 before recovering, and see global growth slowing but not contracting.
Citi's Evans thinks $70 to $80 is a reasonable range for the next year, low enough to not draw the ire of consumers but high enough to satisfy OPEC and encourage new production and alternative sources.
Merrill also lowered its 2009 oil price forecast from $107 a barrel to $90.
Deutsche Bank recently reduced it's late 2008/early 2009 oil price forecast to $85 a barrel, citing a weak global economy.
"We believe crude oil prices have further downside as the fall-out of the financial crisis spreads into the real economy and ultimately global oil demand," Adam Sieminski, the bank's chief energy economist, wrote in a recent research note.
Sieminski also noted how credit-related trouble in Europe, exemplified by this week's sharp selloff in European shares, is boosting the dollar and lowering oil prices.
"For the past few days, European equities have been underperforming their U.S. counterparts," he said, "possibly signaling the markets concerns that European authorities may find it more difficult than the US to coordinate a rescue package in the event of a large-scale banking failure."
First Published: October 8, 2008: 12:31 PM ET

Source: http://money.cnn.com/2008/10/07/news/economy/oil_prices/?postversion=2008100813

Street Wobbles On Goldman Bet

Markets Brief

Steve Schaefer, 09.24.08, 12:20 PM ET

Goldman Sachs Tear Sheet Chart News Latest Markets Coverage Complete Coverage: The Crisis Bring On The Bailout What Paulson's Plan Doesn't Answer Paulson Begins The PR Offensive Readers Respond To Paulson Plan Treasury Department's Bailout Proposal To Congress Money Markets Land Two Guardian Angels The Bubbleologist Get Shorty Thinking Through The Turmoil Tall Order for Short-Sellers Lehman's Collapse Hits Charities Thinking Through The Turmoil Commentary Steve Forbes On Ending The Crisis Don't Cry For Goldman Free Market To The Rescue

It was a case of déjà vu on Wall Street--stocks paused with Congress conducting hearings on the planned rescue package for the financial sector.

Minimal early gains were eroding, with the Dow down 27 points, or 0.3%, to 10,827. The S&P 500 was off 2 points, or 0.2%, to 1,186; while the Nasdaq held onto a slim advance, up 7 points, or 0.3%, to 2,161. A vote of confidence for Goldman Sachs (nyse: GS - news - people ) gave financial stocks a modest lift, after billionaire Warren Buffett made an aggressive bet on the firm.

Buffett'sBerkshire Hathaway (nyse: BRK - news - people ) is investing $5.0 billion in Goldman, which has sailed through the credit crunch relatively unscathed, but proved unable to avoid the lack of confidence that took down rivals Bear Stearns, Lehman Brothers Holdings (nyse: LEH - news - people ) and Merrill Lynch (nyse: MER - news - people ). Monday, Goldman and Morgan Stanley (nyse: MS - news - people ), the last two independent securities firms left on the Street, sought and won Federal Reserve approval to morph into commercial banks in a move to gain easier access to funding.

Just days later, the Buffett investment fares well for Goldman's future, even if it comes at a steep cost: perpetual preferred shares with a 10.0% dividend and warrants to purchase a batch of common shares priced at $115.00. The deal gives Buffett an immediate profit -- 11.9% early Wednesday with Goldman up $3.66, or 2.9%, to $128.71 -- and stands to become even more lucrative if Goldman can return to its pre-crisis salad days when its shares peaked above $235.00. (See "Buffett's Golden Goldman Buy.")

Goldman's gains showed that investors take solace in one of the nation's most-respected businessmen throwing his support behind the Street. The firm is also planning to sell an additional $2.5 billion of common stock, but the prospect of further dilution hardly rattled existing shareholders. (See "Goldman Doubles Down.")

Meanwhile, even as Buffett was making his bet on Goldman, Fed chief Ben Bernanke and Treasury Secretary Henry Paulson were set for another round of hearings to defend their $700.0 billion rescue package to prop up the U.S. financial system. Bond traders rushed back into the perceived safety of government debt, despite expectations a hefty debt issuance will be part of any bailout plan.

Treasury yields faltered, with the steepest drops coming in shorter maturities. The three-month T-bill was yielding 0.51%, down from 0.86% Tuesday. The 10-year note yield slipped to 3.77%, from 3.84%, while the two-year yield fell to 2.03%, from 2.11%.

A steeper-than-expected drop in August existing home sales did little to faze investors, after the National Association of Realtors recorded 4.91 million sales for the month, down from 5.02 million in July. The July figures included a notable percentage of distressed homes purchased out of foreclosure. The August data also had one encouraging sign, as the report showed a 10.4 month supply of inventory, down from a revised 10.9 months in July.

Buffett Gives Europe Support

Financial Fallout Hits Silicon Valley

Source: http://www.forbes.com/markets/2008/09/24/briefing-midday-goldman-markets-equity-cx_ss_0924markets22.html

Just who is Henry "Hank" Paulson?

From Wikipedia, the free encyclopedia

(Redirected from Hank Paulson)

Henry M. Paulson
74th United States Secretary of the Treasury
Incumbent
Assumed office July 3, 2006
President	George W. Bush
Preceded by	John W. Snow
Born	March 28, 1946 (1946-03-28) (age 62) Palm Beach, Florida
Political party	Republican
Alma mater	Dartmouth College, Harvard University
Profession	Investment banker
Religion	Christian Science

Henry Merritt "Hank" Paulson Jr. (born March 28, 1946) is the United States Treasury Secretary and member of the International Monetary Fund Board of Governors. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.

Contents 1 Early life and family 2 Career highlights 3 Civic activities 4 Treasury Secretary nomination 5 Acts as Treasury Secretary 5.1 Views Expressed by Paulson as Secretary of the Treasury 5.2 Leader of U.S. government economic bailout efforts of 2008 6 References 7 Further reading 8 External links

Early life and family

Born in Palm Beach, Florida, to Marianna Gallaeur and Henry Merritt Paulson, a wholesale jeweler,^[1] he was raised in Barrington Hills, Illinois. He was raised as a Christian Scientist.^[2] Paulson attained the rank of Eagle Scout in the Boy Scouts of America.^[3][4] Paulson received his Bachelor of Arts in English from Dartmouth College in 1968;^[5] at Dartmouth he was a member of Phi Beta Kappa and was an All Ivy, All East, and honorable mention All American as an offensive lineman.

He met his wife Wendy during his senior year. The couple has two adult children, Henry Merritt III and Amanda Clark, and became grandparents in June 2007. They maintain homes in Washington, DC and Barrington Hills, Illinois.

In 1970 Paulson received a Master of Business Administration degree from Harvard Business School.^[6]

Career highlights

Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.^[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.

He joined Goldman Sachs in 1974, working in the firm's Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;^[8] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million projected for 2006.^[9] His net worth has been estimated at over US$700 million.^[9] Paulson has personally built close relations with China during his career. In July 2008 it was reported by The Daily Telegraph that: "Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country more than 70 times."^[10]

Civic activities

Paulson has been described as an avid nature lover.^[11] He has been a member of The Nature Conservancy for decades and was the organization's board chairman and co-chair of its Asia-Pacific Council.^[7] In that capacity, Paulson worked with former President of the People's Republic of China Jiang Zemin to preserve the Tiger Leaping Gorge in Yunnan province.

Paulson is also on the Board of Directors of the Peregrine Fund; was the founding Chairman of the Advisory Board of the School of Economics and Management of Tsinghua University in Beijing; and, previously served as chairman of the influential trade group, the Financial Services Forum.

Notable among the members of Bush's cabinet, Paulson has said he is a strong believer in the effect of human activity on global warming and advocates immediate action to decrease this effect.^[12]

As an environmental leader and philanthropist, Paulson while at Goldman Sachs, oversaw the corporate donation of 680,000 forested acres on the Chilean side of Tierra del Fuego, which led to criticisms from Goldman shareholder groups ^[13]. He further donated US$100 million of assets from his wealth to conservancy causes. He pledged his entire fortune for the same purpose at death. ^[14] He has also been considered someone who can influence world and business leaders to think beyond the bottom line. ^[15]

Treasury Secretary nomination

Paulson (right) with President George W. Bush as his nomination to become Treasury Secretary is announced.

Paulson was nominated by U.S. President George W. Bush to succeed John Snow as the Treasury Secretary on May 30, 2006.^[16] On June 28, 2006, he was confirmed by the United States Senate to serve in the position.^[17] Paulson was officially sworn in at a ceremony held at the Treasury Department on the morning of July 10, 2006.

Paulson's three immediate predecessors as CEO of Goldman Sachs — Jon Corzine, Stephen Friedman, and Robert Rubin — each left the company to serve in government: Corzine as a U.S. Senator (later Governor of New Jersey), Friedman as chairman of the National Economic Council (later chairman of the President's Foreign Intelligence Advisory Board), and Rubin as both chairman of the NEC and later Treasury Secretary under President Bill Clinton.^[18]

Acts as Treasury Secretary

Paulson has quickly distinguished himself from his two predecessors in the Bush administration by formally identifying the wide gap between the richest and poorest Americans as an issue on his list of the country's four major long-term economic issues to be addressed, highlighting the issue in one of his first public appearances as Secretary of Treasury.^[19]

Paulson has conceded that chances were slim for agreeing on a method to reform Social Security financing, but said he would keep trying to find bipartisan support for it. ^[20]

He also helped to create the Hope Now Alliance to help struggling homeowners during the subprime mortgage financial crisis.^[21]

Views Expressed by Paulson as Secretary of the Treasury

In August 2007, Secretary Paulson explained that U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades. ^[22]

On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, “it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.” ^[23]

On August 10, 2008, Secretary Paulson told NBC’s Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac.^[24] On September 7, 2008, both Fannie Mae and Freddie Mac went into conservatorship.^[25]

Leader of U.S. government economic bailout efforts of 2008

Paulson was the designated leader of the Bush administration's efforts in 2008 to federalize the cost of bad loans made by unregulated financial institutions.

Through unprecedented intervention by the U.S. Treasury, Paulson led government efforts purported to avoid a severe economic slowdown. He pushed through the conservatorship of government agency mortgage giants Fannie Mae and Freddie Mac. Working with Federal Reserve Chairman Ben Bernanke, he influenced the decision to create a credit facility (bridge loan & warrants) of US$85 billion to American International Group so it would avoid filing bankruptcy.

In late September of 2008, Paulson, along with Bernanke and Christopher Cox, led the effort to help financial firms by agreeing to create out of nothing US$700 billion dollars to purchase bad debt they had incurred.^[26] Discussing his decision to take action, Paulson said: “It just happened dramatically. There was only one way that we could reassure the markets and deal with a very significant and broad-based freezing of the credit market. There was no political calculus. It was overwhelmingly obvious.”^[27]

On September 19, 2008, Paulson called for the U.S. government to spend hundreds of billions of dollars more to rescue financial firms from nonperforming mortgages that threaten the stability of those firms.^[28] Due to his leadership and public appearances on this issue, the press labeled these measures the "Paulson financial rescue plan" or simply the Paulson Plan.^[29]

There has been some criticism of Paulson, with suggestions that Paulson's plan may potentially have some conflicts of interest. This since Paulson is the former CEO of Goldman Sachs, a firm that may benefit from the plan. ^[30][31] Unlike the previous bailouts and managed liquidations of Goldman competitors Bear Stearns, Merrill Lynch and Lehman Bros. and those of AIG, Freddie Mac and Fannie Mae, in which shareholder value was largely wiped out, Goldman's stock would likely rise under the Paulson plan, benefiting his former partners, because it would take distressed assets off of their balance sheet. ^[32]

The proposed bill would give him unprecedented powers over the economic and financial life of the U.S. Section 8 of Paulson’s plan states: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”^[33]

References

1. ^ 1
2. ^ Patricia Sellers, Hank Paulson's secret life, The CEO of Goldman Sachs is passionate about banking. But he's also obsessed with snakes, tarantulas, and coral reefs., Public Broadcasting Service, "Wall Street Week with Fortune" feature, December 29, 2003.
3. ^ Townley, Alvin [2006-12-26]. Legacy of Honor: The Values and Influence of America's Eagle Scouts. New York: St. Martin's Press, pp. 178-188, 196. ISBN 0-312-36653-1. Retrieved on 2006-12-29.
4. ^ Ray, Mark (2007). "What It Means to Be an Eagle Scout". Scouting Magazine. Boy Scouts of America. Retrieved on 2007-01-05.
5. ^ Belser, Alex (31 May 2006). "Paulson '68 to lead Treasury", The Dartmouth.
6. ^ www.02138mag.com/people/385.htmlM
7. ^ ^{a b} The Nature Conservancy (2006). Henry M. Paulson, Jr..
8. ^ Goldman Sachs (2006). Goldman Sachs Group, Inc - Management.
9. ^ ^{a b} Forbes (2006). Henry M. Paulson, Jr..
10. ^ US faces global funding crisis, warns Merrill Lynch - Telegraph
11. ^ Somerville, Glenn (30 May 2006). "Paulson brings Wall Street luster to Treasury", Yahoo! News.
12. ^ Heilprin, John (2 June 2006). "A global warming believer in Bush Cabinet", Associated Press.
13. ^ Treasury Nominee Hank Paulson Needs to Answer Some Questions, Human Events, 2006-06-13
14. ^ Paulson plans to donate £410m fortune to environmental causes, The Independent, 2004-01-16
15. ^ Mark Brandon. Environmental Cred for Bush Treasury Nominee, Sustainable Log (Blogspot)
16. ^ White House (2006). President Bush Nominates Henry Paulson as Treasury Secretary. Retrieved June 29, 2006.
17. ^ Associated Press (2006). Senate Approves Paulson as Treasury Secretary.
18. ^ White House (2006).President Commends Senate for Confirming Henry Paulson as Treasury Secretary. Retrieved June 29, 2006.
19. ^ The Christian Science Monitor August 3, 2006 New Treasury head eyes rising inequality. Retrieved August 3, 2006.
20. ^ "Paulson: Social Security Reform Hopes Slim". Reuters, February 3, 2007.
21. ^ Hope Now Alliance (2007-10-10). "HOPE NOW Alliance Created to Help Distressed Homeowners". Press release. Retrieved on 2008-09-24.
22. ^ Lawder, David (August 1, 2007), "Paulson sees subprime woes contained", The Boston Globe, <http://www.boston.com/business/articles/2007/08/01/paulson_sees_subprime_woes_contained/>
23. ^ "Treasury Secretary Insists Banks Are Safe", CBS News (2008-07-20). Retrieved on 2008-09-23.
24. ^ Brinsley, John (August 10, 2008). "Paulson Says No Plans to Add Cash to Fannie, Freddie", Bloomsberg Worldwide. Retrieved on 2008-09-23.
25. ^ Lockhart, James B., III (2008-09-07). "Statement of FHFA Director James B. Lockhart", Federal Housing Finance Agency. Retrieved on 2008-09-23.
26. ^ Joelle Tessler, Paulson oversees historic government intervention, Associated Press, 2008-09-19
27. ^ Baker, Peter (2008-09-20). "A Professor and a Banker Bury Old Dogma on Markets", New York Times.
28. ^ Sahadi, Jeanne (2008-09-19). "Rescue cost: Hundreds of billions", CNNMoney.com.
29. ^ ""Paulson plan"", Google News search.
30. ^ Is it safe to trust a Wall Street veteran with a Wall Street bailout?
31. ^ A Second Opinion?
32. ^ Shameless Cronyism
33. ^ Beck, Rachel (2008-09-23). "Transparency key to bailout success", Associated Press. Retrieved on 2008-09-23.

Further reading

• Fortune Magazine: Hank Paulson's secret life
• AP story: Paulson picks bird watching over golf

External links

Wikimedia Commons has media related to:

Henry Paulson

• Paulson's biography from the Treasury Department
• Paulson on China: October 2007, November 2007
• Project Vote Smart - Secretary Henry M. Paulson Jr.
• Henry Paulson's federal campaign contributions

Business positions
Preceded by Jon Corzine	Chairman and CEO, Goldman Sachs June 1998 – July 3, 2006	Succeeded by Lloyd Blankfein
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Order of precedence
Preceded by Condoleezza Rice Secretary of State	United States Presidential Line of Succession 5th in line	Succeeded by Robert Gates Secretary of Defense
Order of precedence in the United States of America
Preceded by Sandra Day O'Connor Retired Associate Justice of the Supreme Court of the United States	United States order of precedence United States Secretary of the Treasury	Succeeded by Robert Gates United States Secretary of Defense

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[show] v • d • e G8 Finance Ministers Jim Flaherty · Christine Lagarde · Peer Steinbrück · Giulio Tremonti · Bunmei Ibuki · Alexei Kudrin · Alistair Darling · Henry Paulson

[show] v • d • e Cabinet of President George W. Bush (2001 – 2009) Vice President Dick Cheney (2001 – present) Secretary of State Colin Powell (2001 – 2005) • Condoleezza Rice (2005 – present) Secretary of the Treasury Paul O'Neill (2001 – 2002) • John Snow (2002 – 2006) • Henry Paulson (2006 – present) Secretary of Defense Donald Rumsfeld (2001 – 2006) • Robert Gates (2006 – present) Attorney General John Ashcroft (2001 – 2005) • Alberto Gonzales (2005 – 2007) • Michael Mukasey (2007 – present) Secretary of the Interior Gale Norton (2001 – 2006) • Dirk Kempthorne (2006 – present) Secretary of the Agriculture Ann Veneman (2001 – 2005) • Mike Johanns (2005 – 2007) • Ed Schafer (2008 – present) Secretary of Commerce Donald Evans (2001 – 2005) • Carlos Gutierrez (2005 – present) Secretary of Labor Elaine Chao (2001 – present) Secretary of Health and Human Services Tommy Thompson (2001 – 2005) • Mike Leavitt (2005 – present) Secretary of Education Rod Paige (2001 – 2005) • Margaret Spellings (2005 – Present) Secretary of Housing and Urban Development Mel Martinez (2001 – 2003) • Alphonso Jackson (2003 – 2008) • Steve Preston (2008 – present) Secretary of Transportation Norman Mineta (2001 – 2006) • Mary Peters (2006 – present) Secretary of Energy Spencer Abraham (2001 – 2005) • Samuel Bodman (2005 – present) Secretary of Veterans Affairs Anthony Principi (2001 – 2005) • Jim Nicholson (2005 – 2007) • James Peake (2007 – present) Secretary of Homeland Security Tom Ridge (2003 – 2005) • Michael Chertoff (2005 – present) Chief of Staff Andrew Card (2001 – 2006) • Joshua Bolten (2006 – present) Administrator of the Environmental Protection Agency Christine Todd Whitman (2001 – 2003) • Mike Leavitt (2003 – 2005) • Stephen Johnson (2005 – present) Director of the Office of Management and Budget Mitch Daniels (2001 – 2003) • Joshua Bolten (2003 – 2006) • Rob Portman (2006 – 2007) • Jim Nussle (2007 – present) Director of National Drug Control Policy John Walters (2001 – present)

http://en.wikipedia.org/wiki/Hank_Paulson