The New Hank Paulson
Life has changed for all us over the past few months. But one group of market players have been particularly hard hit by the winds of change blowing around the world:
Treasury Secretary Henry M. Paulson had a stern message for more than two dozen of the nation's most powerful hedge fund managers gathered in the third-floor conference room near his office.
Paulson told them it was time to begin regulating the opaque realm of hedge funds, reversing his long-held opposition. "You should not be thinking about how to fight it but how to make it work," he recounted telling them at the meeting last month.
They were stunned. One manager recalled muttering as he walked out: "What happened to the Hank Paulson we knew?" LA Times
Has Paulson has gone off the deep end? Or has the financial systems brush with death fundamentally changed him? He appears to be reborn:
His evolution in thinking has extended even beyond these government programs to a set of new beliefs that he has yet to trumpet publicly or, in most cases, even share privately with colleagues on Wall Street and in the White House.
While they, too, have changed some of their views on regulation, Paulson disclosed that he has traveled an even greater distance. "My thinking has evolved a lot to the point where I've seen regulation up close and personal," he said in a series of interviews.
It wasn’t just the crisis that changed him. It was every bit as much sitting behind the desk where he fashioned new regulation.
“I’ve realized how flawed it is and how imperfect, but how necessary it is,” he added.
Paulson is backtracking on policy statements he made as recently as 2007, and recent events have forced him to use all the tools in his kit, MacGyver-style:
In reshaping his philosophy, he has had to feel his way even as the once-familiar financial landscape shifted around him. Some senior government officials who worked with him said he invented much of the government’s response on the fly.
Paulson’s ad-hoc decision making style has been a hallmark of the past twelve months, but there has got to be a better way.
Perhaps second guessing him every step of the process made the situation worse. That will have to be debated by historians. But his numerous attempts at calling audibles have gone tragically wrong.
On the bright side, in the long run, we are all dead.
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Maybe Hank, who famously wears an Timex Ironman watch, along with many other Goldman alums, should trade it in for a Swiss Army Knife, which got McGyver out of many scrapes.
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Amid financial crisis, a conversion for Henry Paulson
LA Times
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
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