Front Page NY Times: Paulson In Frequent Contact With Goldman Chief Blankfein During Financial Crisis


I want you to know that I had no role whatsoever in any of the Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties.

– Hank Paulson, testimony before Congress July 2009

But according to two senior government officials involved in the discussions about an A.I.G. bailout and several other people who attended those meetings and requested anonymity because of confidentiality agreements, the government’s decision to rescue A.I.G was made collectively by Mr. Paulson, officials from the Federal Reserve and other financial regulators in meetings at the New York Fed over the weekend of Sept. 13-14, 2008.

These people said Mr. Paulson played a major role in the A.I.G. rescue discussions over that weekend and that it was well known among the participants that a loan to A.I.G. would be used to pay Goldman and the insurer’s other trading partners.

Over that weekend, according to a former senior government official involved in the discussions, Mr. Paulson said that he had been warned by lawyers for the Treasury Department not to contact Goldman executives directly.  But he said Mr. Paulson told him he had disregarded the advice because the “crisis” required action.

– From The New York Times article “Paulson’s Calls To Goldman Tested Ethics”, August 9, A1

On the morning of Sept. 16, 2008, the day the A.I.G. rescue was announced, Mr. Paulson’s calendars show that he took a call from Mr. Blankfein at 9:40 a.m.  Mr. Paulson received the ethics waiver regarding contacts with Goldman between 2:30 and 3 the next afternoon.  According to his calendar, he called Mr. Blankfein five times that day.  The first call was placed at 9:10 a.m.; the second at 12:15 p.m.; and there were two more calls later that day.  That evening, after taking a call from President Bush, Mr. Paulson called Mr. Blankfein again.

When the Treasury secretary reached his office the next day, on Sept. 18, his first call, at 6:55 a.m., went to Mr. Blankfein.  That was followed by a call from Mr. Blankfein.  All told, from Sept. 16 to Sept. 21, 2008, Mr. Paulson and Mr. Blankfein spoke 24 times.

At the height of the financial crisis, Mr. Paulson spoke far more often with Mr. Blankfein than any other executive, according to entries in his calendars.

– From The New York Times article “Paulson’s Calls To Goldman Tested Ethics”, August 9, A1

What this shows is that Paulson probably was centrally involved in the decision to take a big stake in AIG and that he spoke with Goldman CEO Lloyd Blankfein more than he did with the other Wall Street CEOs during the crisis.  This doesn’t show, in my opinion, that Paulson acted improperly and with the intention to specially benefit Goldman Sachs, but it certainly doesn’t look good.

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