Blockbuster stuff from the New York Times Sunday on stunningly frequent contacts during the height of the financial crisis between Henry Paulson and his successor as CEO of Goldman Sachs, Lloyd Blankfein.
The then-Treasury Secretary and Blankfein spoke by phone two dozen times in one week in September 2008 when AIG was bailed out — a deal that handed Goldman, a key counterparty of AIG, $13 billion in federal money.
Perhaps the most remarkable thing about the Times’ account of the contacts between the two men, for which Paulson belatedly sought and received an ethics waiver, is that the phone calls were often coming from the Treasury Secretary.
In one day, Sept. 17, Paulson called Blankfein four times. Then after taking a call from President Bush in the evening, the Treasury Secretary called Blankfein yet again — almost as if he felt obliged to keep the Goldman CEO constantly abreast of his progress. He spoke with Blankfein “far more” than with other executives, the Times reports.
The Times describes the tick-tock of the contacts, based on Paulson’s calendar, obtained through the Freedom Of Information Act:
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.
In all, Paulson spoke with Blankfein 26 times before he received the waiver from his ethics agreement, which barred substantive contact with his former firm, the Times reports. The former Treasury Secretary’s spokesman maintains the agreement allowed him to talk to Goldman executives about market developments.
The Times story contains two more important developments: First, according to a “former senior government official,” that Treasury lawyers had warned Paulson not to contact Goldman executives directly. The official says Paulson didn’t take the advice “because the ‘crisis’ required action.”
Paulson’s spokesman responds that, “Hank doesn’t recall saying that.”
Second, according to two senior officials and several other sources cited by the Times, that Paulson was deeply involved in the discussions that lead to the AIG bailout — which directly benefited his former firm, Goldman.
That seems to contradict Paulson’s statement to the House Oversight Committee in July 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.”
Paulson’s spokesman maintains that the waiver he sought to make contacts with Goldman was in anticipation of a need to bail out Goldman itself — not so he could be involved in the AIG bailout.
Paulson himself is not talking to reporters because “his publisher had barred him from granting interviews until his manuscript” is done.