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Paulson, ethics waivers, Goldman and the AIG bailout

From the New York Times:

“I operated very consistently within the ethic guidelines I had as secretary of the Treasury,” Mr. Paulson responded, adding that he asked for an ethics waiver for his interactions with his old firm “when it became clear that we had some very significant issues with Goldman Sachs.”

Mr. Paulson did not say when he received a waiver, but copies of two waivers he received — from the White House counsel’s office and the Treasury Department — show they were issued on the afternoon of Sept. 17, 2008.

That date was in the middle of the most perilous week of the financial crisis and a day after the government agreed to lend $85 billion to the American International Group, which used the money to pay off Goldman and other big banks that were financially threatened by A.I.G.’s potential collapse.

In India I think this would be par for the course. Our government routinely decides to rescue companies in which they have an interest, using taxpayer money. And Murli Deora is on the side of a certain M. Ambani, surprising nobody.

But I digress. This is big for the U.S. though it probably only surprises because it’s so blatant. And I like the quantum of research the author does. Further down, is this:

Mr. Paulson’s schedules from 2007 and 2008 show that he spoke with Mr. Blankfein, who was his successor as Goldman’s chief, 26 times before receiving a waiver.

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.

By contrast, Mr. Paulson spoke six times that August with Richard S. Fuld Jr. of Lehman, four times with Jamie Dimon of JPMorgan Chase and only twice with John Thain of Merrill Lynch.

  • Sanjeet says:

    >These are the same companies whose experts are considered to be best in finance and economy. But they could not stick to basics and went away with greed when they knew things are going bad. They did not deserve bail out money. But thats how it works, when size of an entity becomes too large that if it falls many would stuck under their debris, even if they do something wrong, govt would try to save.
    Sale out is better then bail out like Indian govt did in Satyam case.

  • Anonymous says:

    >Who could dare to write about reliance. There are people who could also write bundle about reliance, but they're afraid of their life. They won't get any support. First of all, Indian people are corrupt, that's the reason why we're getting too much corrupted politicians. Everything is happening in the name of caste, religion, quota, corruption and money. Nothing is happening because of talent. If you've money, you could easily win in India. If you've only talent, its better to look for some other place.

  • Sandeep says:

    >Anon,

    In India if you've money, you easily win.

    In US/West, if you have talent, you then make money and then win.

    What's the difference?