Saturday, August 2, 2008

Goldman's Revolving Door

"Goldman Sachs Group Inc.'s [GS] senior financial-institutions banker, Ken Wilson [KW], is temporarily leaving the firm to advise Treasury Secretary Henry Paulson [HP] on how to resolve the country's banking crisis, according to people familar with the matter. ... While a number of details still must be worked out, Mr. Wilson, 61 years old, is expected to serve without pay", Dennis Berman at the WSJ, 21 July 2008.

GS "banker [KW] was standing in the security line at Westchester County Airport, north of New York City, at 6:45 a.m. last Thursday when he got a call. 'Kenny, your country needs you,' President George W. Bush told him, urging him to come to work as an adviser to Treasury Secretary [HP] during the current financial turmoil. ... Mr. Wilson--one of Wall Street's most powerful bankers, who over the past year has advised almost every mortgage-laden financial company in the country--on Saturday agreed to join the Treasury Department as an adviser to Mr. Paulson. His job: To help resolve the country's current banking crisis. Mr. Wilson says he will be a 'trouble shooter' of sorts for Mr. Paulson. ... In Mr. Wilson, Mr. Paulson gets a formidable ally in navigating the current problems, with years of Wall Street experience and a Rolodex of well-placed friends and clients. Mr. Wilson, the head of Goldman's financial-institutions group, has served as Wall Street's go-to banker during the last yeart, as firms from Wachovia Corp, to National City Corp. have turned to him for advice on their mortgage woes. ... It is perhaps no surprise that Mr. Paulson, once the CEO of [GS], called on his former collegaue. The two men met at Dartmouth College, and Mr, Paulson helped recruit Mr. Wilson to Goldman", Susanne Craig at the WSJ, 22 July 2008.

"After reading your editorial 'Paulson's Fannie Test' (July 15), one wonders whether [HP] cares more about shoring up the system to protect brokerage houses and hedge funds than he does to maintain a fiduciary role over the U.S. taxpayer balance sheet and to promote a sound dollar. ... Let's stop this nonsense about 'systemic risk' management and let the free market work as they should. Stop socializing risk, Mr. Paulson. There is no blank check from the U.S. taxpayer, and please apologize to Adam Smith and Milton Friedman, who I am, sure are both rolling over in their graves simultaneously", my emphasis, Susanne Lomatch (SL) letter to the WSJ, 22 July 2008.

KW, Uncle Sam will be forever indebted to you for your service. I salute you. Now President Bush should nominate you for the "Medal of Freedom".

304 million Americans, and "The Man From Goldman", with apologies to "The Man From Uncle" replaces GS crony Robert Steel (RS) with GS crony KW. It's tough to imagine a more inappropriate choice, but I believe Anthony Mozilo was available. KW had clients like: NCC, operating under a "confidential" agreement, see my 18 June 2008 post and and Wachovia, now headed by RS. Whose interests does HP expect KW to represent, Uncle Sam's or KW's and HP's "former" clients? Will KW next be NCC's CEO Reading this article made me laugh.

SL, bravo. One issue: why do you "wonder"? Either HP knows what he is doing, or he doesn't. Let us not forget, HP is a "double Ivy Leaguer". HP doesn't need a "blank check", he's got Helicoper, now Zimbabwe, Ben's printing press.

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