Tuesday, October 20, 2009


MOTHER JONES--According to a new book on the financial meltdown by New York Times reporter Andrew Ross Sorkin, in June 2008, Paulson, who was the chairman of Goldman Sachs before joining the Bush administration, held a secret meeting in Moscow with the board of directors of his former employer. The problem for Paulson—then and possibly now—was that after he had been nominated in 2006 to the Treasury post he had signed an ethics letter vowing to stay clear of potential conflicts of interest with Goldman Sachs and promising not to take any action that might affect the firm's ability to cover his multimillion-dollar pension.

As Sorkin recounts the episode, Paulson and the Goldman Sachs board happened to be in Moscow at the same time. Learning of this coincidence, Paulson asked his chief of staff, Jim Wilkinson, to set up a meeting. Wilkinson was not happy about this. "For fuck's sake!" he thought, according to Sorkin. Paulson told him that the meeting could be considered a social gathering, but as Wilkinson worked out the details with the Goldman Sachs crowd, he asked that the session remain confidential. And the event was not placed on Paulson's official calendar.

When Paulson and the firm's execs got together at the Moscow Marriott Grand Hotel, the Treasury secretary gave the Goldman Sachs crew his read on what was happening with the economy and his department's effort to prepare for handling failed banks. He also previewed for them an important speech he would soon deliver. That is, he privately shared his views on matters of direct interest to his old firm. And as Sorkin points out, Paulson had at this point never provided such a briefing to any other company (except for once "briefly dropping by" a cocktail party for the board of BlackRock).

In September 2008, as the economy imploded, Paulson obtained an ethics waiver that would permit him to deal with Goldman Sachs. But at the time of the Moscow meeting, he was still covered by his original ethics agreement.

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