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Hank Paulson
74th U.S. Treasury Secretary; Former Goldman Sachs CEO; Architect of the $700 Billion Wall Street Bailout
U.S. Treasury Secretary (2006-2009); Goldman Sachs Chairman and CEO (1999-2006)
Overview
Henry Merritt "Hank" Paulson Jr. served as the 74th United States Secretary of the Treasury from 2006 to 2009, presiding over the federal government's response to the worst financial crisis since the Great Depression. Before entering government, Paulson spent 32 years at Goldman Sachs, rising to Chairman and CEO in 1999. Upon becoming Treasury Secretary, Paulson liquidated his approximately $700 million Goldman Sachs stake tax-free under a federal ethics provision designed to prevent conflicts of interest, the same provision that created one, as his personal fortune now depended on the survival of the financial system his former firm dominated. When AIG was bailed out with $182 billion in taxpayer funds, $12.9 billion flowed directly to Goldman Sachs as an AIG counterparty, paid at 100 cents on the dollar while ordinary creditors received fractions. Paulson initially presented Congress with a three-page proposal demanding $700 billion in bailout authority with no judicial review, no oversight, and no accountability. When the House initially rejected the plan, he reportedly got on one knee before Speaker Nancy Pelosi to plead for passage. On October 14, 2008, Paulson summoned the CEOs of the nine largest banks to a mandatory meeting at Treasury, placed a one-page term sheet in front of each, and told them they would all accept TARP funds whether they wanted them or not, distributing $125 billion in a single afternoon. Critics note that Paulson allowed Lehman Brothers (Goldman's chief rival) to fail while rescuing AIG (Goldman's largest counterparty). He consistently prioritized the interests of Wall Street over homeowners: TARP funds flowed to banks, not to the millions of Americans facing foreclosure. After leaving office, Paulson faced no investigation despite his Goldman ties, the conflict of interest in the AIG bailout, and his role in designing a bailout that socialized Wall Street's losses while privatizing its gains.
Key Affiliations
Controversies & Concerns
Designed and executed the $700 billion TARP bailout that rescued Wall Street while millions of Americans lost their homes
Former Goldman Sachs CEO whose personal $700 million Goldman stake was liquidated tax-free upon entering government
AIG bailout directed $12.9 billion to Goldman Sachs at 100 cents on the dollar while Paulson was Treasury Secretary, the most direct conflict of interest in the crisis
Allowed Lehman Brothers (Goldman's chief rival) to fail while rescuing AIG (Goldman's largest counterparty), raising questions about favoritism
Initially presented Congress with a three-page demand for $700 billion with no oversight, no judicial review, and no accountability
Summoned nine bank CEOs on October 14, 2008 and forced them to accept TARP funds, distributing $125 billion in one afternoon
TARP funds flowed entirely to banks, not to homeowners facing foreclosure, socializing losses while privatizing gains
Reportedly got on one knee before Speaker Pelosi to beg for bailout passage after the House initially rejected it
Faced no investigation or prosecution despite the Goldman-AIG conflict of interest and the design of a bailout that funneled taxpayer money to his former colleagues
Related Investigations (1)
Known Associates & Connections
Ben Bernanke
Federal Reserve Chairman who coordinated bailout strategy with Paulson throughout the crisis
Tim Geithner
NY Fed President during crisis, became Treasury Secretary after Paulson; both managed bailout
Lloyd Blankfein
Paulson's successor as Goldman Sachs CEO; Goldman was largest beneficiary of AIG bailout
Robert Rubin
Fellow Goldman-to-Treasury Secretary; architect of deregulation that enabled the crisis
Dick Fuld
Lehman Brothers CEO whose firm Paulson chose not to rescue, triggering global panic
Sources & Documentation
4 documented sources from official records, investigations, and reports
Personal Information
- Born
- March 28, 1946
- Birthplace
- Palm Beach, Florida, USA
- Also Known As
- The Hammer, Hank
Education
- •Dartmouth College, BA English (1968)
- •Harvard Business School, MBA (1970)
Key Timeline
March 28, 1946
Born in Palm Beach, Florida
1970
Earns MBA from Harvard Business School; serves as Staff Assistant to the Assistant Secretary of Defense at the Pentagon (1970-1972)
1974
Joins Goldman Sachs as an investment banker in Chicago office
1999
Becomes Chairman and CEO of Goldman Sachs, succeeding Jon Corzine. Compensation reaches tens of millions annually
July 10, 2006
Sworn in as 74th U.S. Secretary of the Treasury under President George W. Bush. Liquidates ~$700 million Goldman stake tax-free
March 2008
Facilitates JPMorgan's emergency acquisition of Bear Stearns with $29 billion in Fed guarantees
September 7, 2008
Places Fannie Mae and Freddie Mac into government conservatorship, committing $200 billion in taxpayer support
September 15, 2008
Lehman Brothers collapses after Paulson declines to provide government support, triggering global panic. Goldman rival eliminated
September 16, 2008
AIG bailed out with $85 billion (eventually $182 billion). Goldman Sachs receives $12.9 billion through AIG at 100 cents on the dollar
September 19, 2008
Presents Congress with 3-page demand for $700 billion bailout authority with no oversight or judicial review
October 3, 2008
Emergency Economic Stabilization Act signed creating TARP after House initially rejected plan and Paulson begged Pelosi on one knee
October 14, 2008
Summons nine bank CEOs to Treasury, forces each to accept TARP funds. $125 billion distributed in one afternoon
January 2009
Leaves Treasury after Obama inauguration. TARP has distributed hundreds of billions to banks while homeowner relief remains negligible
2011
Founds the Paulson Institute at University of Chicago, focusing on U.S.-China economic relations and environmental conservation