Hank Paulson, known around the house as Lurch, is back in a documentary produced by the Wall Street fellow traveller Bloomberg Businessweek. It’s called “Hank: Five Years From the Brink,” and extensively features his wife Wendy. Hank and Wendy are bird watchers, we are told. Raptors like bird watching too. Now Hank is back, in the media circuit, making like an innocent over the trauma of the financial crisis.
Yet, everytime we see a photo of Hank, never mind a whole movie of him, we get this creepy feeling that he must be a really scary guy. You don’t get to the top of the pile at Goldman Sachs by being Mr. Nice Guy. Yet there he is in the movie, Mr. Nice Guy.
Let us go back and review what happened. The mortgage origination industry created millions of fraudulent mortgages; the banks (including Hank’s own Goldman Sachs) packaged these fraudulent mortgages into fraudulent securities that were sold all over the world with fraudulent ratings. Yet Hank is innocent of this. Even after John Paulson (no relation, we suppose) came to Goldman Sachs with plans to bet against this fraudulent structure. We wonder if Goldman took the other side. Since the bank has a policy of not talking to the media, we shall never know.
When Hank and many of his fellow Goldman alumni made the political pilgrimage to Washington, the fox was in the chicken coop. He bailed out the banks, his bank. He did not bail out Lehman. We think it’s because Hank did not like Richard Fuld.
Either he was atoning for his sins or deferring the capital gains tax on his winnings. Let us be charitable, as he now claims to have been all along. The movie shows us the man who helped create the financial crisis telling us earnestly of his sacrificial efforts to save the economy.
My wife was in the “investment business” nearly her entire life, but, alas, she is not filthy rich. She was on the buy-side, as they say, and not on the sell-side. But she still keeps in touch. Everytime I ask her former “counter-parties” on the sell side if it wouldn’t have been better to let the banks go down (Me: “I mean Main Street is in the tank anyway, so who cares about Wall Street?”), they would gag on their canapés and blurt emphatically about the absolute necessity of the government and the Fed having to bail out the banks and Wall Street generally, or else the world will end. Each and every one of them was employed in finance and investments.
At least we could have enjoyed watching the banks go down, like watching a good comedy sketch. The Germans call this “schadenfreude.” We are told it’s beneath us.
