Opinion

Felix Salmon

The secret Paulson-Goldman meeting

By Felix Salmon
October 20, 2009

Andrew Ross Sorkin’s new book is out today, and breaks some pretty stunning news, dating from the end of June, 2008. At this point, we’re still months away from the now-famous but then-secret waiver, issued in mid-September, which allowed Hank Paulson to talk to Goldman Sachs; he’d promised not to do that when he moved from Goldman to Treasury.

But it turns out that Paulson just happened to be in Moscow at the same time that Goldman’s board of directors was having dinner there with Mikhail Gorbachev. (You know, as one does.) Take it away, Andrew:

When Paulson learned that Goldman’s board would be in Moscow at the same time as him, he had [Treasury chief of staff] Jim Wilkinson organize a meeting with them. Nothing formal, purely social — for old times’ sake.

For fuck’s sake! Wilkinson thought. He and Treasury had had enough trouble trying to fend off all the Goldman Sachs conspiracy theories constantly being bandied about in Washington and on Wall Street. A private meeting with its board? In Moscow?

For the nearly two years that Paulson had been Treasury secretary he had not met privately with the board of any company, except for briefly dropping by a cocktail party that Larry Fink’s BlackRock was holding for its directors at the Emirates Palace Hotel in Abu Dhabi in June.

Anxious about the prospect of such a meeting, Wilkinson called to get approval from Treasury’s general counsel. Bob Hoyt, who wasn’t enamored of the “optics” of such a meeting, said that as long as it remained a “social event,” it wouldn’t run afoul of the ethics guidelines.

Still, Wilkinson had told [Goldman chief of staff John] Rogers, “Let’s keep this quiet,” as the two coordinated the details. They agreed that Goldman’s directors would join him in his hotel suite following their dinner with Gorbachev. Paulson would not record the “social event” on his official calendar…

“Come on in,” a buoyant Paulson said as he greeted everyone, shaking hands and giving bear hugs to some.

For the next hour, Paulson regaled his old friends with stories about his time in Treasury and his prognostications about the economy. They questioned him about the possibility of another bank blowing up, like Lehman, and he talked about the need for the government to have the power to wind down troubled firms, offering a preview of his upcoming speech.

How on earth did Paulson think this was OK? Goldman Sachs was a hugely powerful for-profit investment bank, and there he is, giving private chapter and verse on his opinions about the US and global economy, talking about internal Treasury matters, and previewing an upcoming (and surely market-moving) speech. All in secret, at a “social event” which somehow got kept off his official calendar. Oh, yes, and one other thing — the whole shebang took place in the Moscow Marriott Grand Hotel, in the context of Goldman directors joking about how all the Moscow hotels were surely bugged.

This is sleazy in the extreme, and will only serve to heighten suspicions that Paulson’s Treasury was rigging the game in favor of Goldman all along. (It’s also a bit peculiar, to say the least, that the only two times Paulson met with private-sector boards he was out of the country, and arguably outside US jurisdiction.)

Paulson didn’t have this meeting out of fear or necessity: in fact, he told the directors that although there might be tough times ahead, “I think we may come out of this by year’s end.” (Blankfein was skeptical.) There was nothing in the way of extenuating circumstances which could possibly justify the secret rendezvous. This is definitely a situation where Wilkinson should have pushed back and said no way — but it’s hard to say no to Hank Paulson. Whose reputation has now taken yet another serious lurch downwards.

Comments
57 comments so far | RSS Comments RSS

And don’t believe Dick Painter.Just another Dick Cheney Worship who’s trying to sell a book and curry the favor of Little Liz.Painter was the laughingstock of the Cheney White House. Guy is pure chump material with a side of Frank Burns Americana.

Posted by Mark | Report as abusive
 

Painter’s dealing the same garbage at The Columbia Journalism Review. Trying to defend Daddy Dick and set himself up for a job down the road at the Liz-Kristol Thunk Tank.http://www.cjr.org/the_audit/sorkin s_major_scoops_on_the_go.php

Posted by Mark | Report as abusive
 

“APPEARANCE” OF CONFLICT OF INTEREST? SLEAZY? CORRUPT? INDIFFERENT? GREEDY? How much more proof does any U.S. Attorney General need?Do you ever wonder what Hank Paulson is doing NOW – with the money he drained from the American People and our Treasury???Well, for one, he has turned his SON, MERRIT PAULSON, into a FRONT MAN to dispose of $50+ million dollars he gave him to buy SHORTSTOP, LLC, which then bought the Portland Beavers AAA baseball team and a soccer team. HANK PAULSON IS 20% PARTNER.They, with the aide of Goldman Sachs’ team, were trying to get PORTLAND to BUILD THEM A STADIUM, WITH MORE TAXPAYER MONEY. Portland taxpayers told them to go fly a kite, so now they’re in little BEAVERTON, OREGON, nearby, attempting the same thing. The Mayor, Denny Doyle, has succumbed, as have some of the council members (but only some, since some council members only found out about the potential deal when it was going to be published in The Oregonian!). The mayor and a few council members are ATTEMPTING TO GET IT THROUGH BY REFUSING TO LET TAXPAYERS VOTE on the issue. All hell is breaking loose in Beaverton’s city council chambers lately.YEP, THE PAULSONS JUST WANT MORE AND MORE. CAN’T GET ENOUGH! And there are more than enough little legislators or business people around this nation who are anxious to RUN WITH THE BIG DOGS, and who are more than willing to sell out their cities to do it. (sound familiar, like maybe 3rd world countries’ despotic dictators who have taken the money and run, leaving their people holding the bag??)I wonder how else Hank Paulson is trying to launder his ill-gotten gains he DRAINED FROM THE AMERICAN PEOPLE AND THE U.S. TREASURY!STAY TUNED TO BEAVERTON, OREGON’S CITY COUNCIL.

Posted by AlwaysAskWHY | Report as abusive
 

FASCISM:“The liberty of democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic STATE itself. That, in its essence, is FASCISM – ownership of government by an individual, by a group or by any controlling private power.” — President Franklin Roosevelt

Posted by AlwaysAskWHY | Report as abusive
 

Is any more evidence needed to put this jerk in prison? That is about the only place where Hanky-Panky deserves to sleep again. Unless it’s with the fishes.

Posted by Kevin Beck | Report as abusive
 

Knowledge is power – hence 100yrs of Bismarck style compulsory indoctrinations – here’s the cure – TRUTH.These criminals should be swinging from the gallows.ESSAYS, MP3s & Videos for your learning pleasure – get smart and get mad, then quit legitimizing illegitimate govt who was as complicit as the day is long. Call your congress criminals and make sure the FED gets the FULL audit HR1207 demands. And read Bennys OpEd – he’s scared as you know what – time to pay the piper you bloody crooks! But only if the people know just how rigged a game it is now, and how it has been since the RRs got their ICC in the late 1800′s – corporatism’s thin end of the wedge went right up the people’s………Introduction to the Financial Elitehttp://thehiddenevil.com/introducti on.aspThe Fed and the Power Eiltehttp://mises.org/media/2787?silverl ight=0The Creature from Jekyll Island: a Second Look at the Federal Reserve by Ed Griffinhttp://uk.youtube.com/watch?v=F3T Ah1gy6rc&feature=relatedA CHRONOLOGICAL HISTORY OF THE NEW WORLD ORDERhttp://www.crossroad.to/Excerpts/ch ronologies/cuddy-nwo.htmWall Street, Banks, and American Foreign Policyhttp://www.lewrockwell.com/rothbar d/rothbard66.htmlBig Business and the Rise of American Statismhttp://praxeology.net/RC-BRS.htmP eace in the Middle East: Empire, Oil, and the Reshaping of the Middle East After World War Ihttp://mises.org/multimedia/mp3/ASC2009  /ASC09_Tooley.mp3

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