US Treasury Secretary Henry M. (Hank) Paulson Jr., former head of Goldman Sachs, is struggling to contain the global economic hurricane that stemmed from the disintegration of the US housing market.
The non-smoking, non-drinking environmentalist has taken a pragmatic approach since taking up office in 2006. In March 2008, he engineered a government-backed takeover of failed investment bank Bear Stearns by JPMorgan Chase. In September, he nationalized giant mortgage companies Fannie Mae and Freddie Mac, saying the failure of either would cause turmoil in financial markets in the United States and around the world. He also rescued insurance giant American International Group with an US$85 billion infusion of capital.
One false move, but as it turned out an extremely costly one, was to refuse government aid as Lehman Brothers slid into bankruptcy. In the financial chaos that followed Paulson drew up the US$ 700 billion Troubled Asset Relief Program (TARP) to buy up bad mortgage debt from Wall Street. Eventually passed by Congress, TARP was overtaken by events in the fast moving crisis, and Paulson once again showed his pragmatic side when he announced a modification to the plan on November 12, saying the government no longer planned to buy up toxic debt, but intended to take equity stakes in troubled banks.
Paulson joined investment bank Goldman Sachs in 1974 and rose through the ranks eventually becoming Chief Executive. He is said to have been paid US$37 million in 2005, and his net worth has been estimated at over US$700 million. During his time with Goldman Sachs Paulson visited China more than 70 times and is said to have developed close relationships with the country's leadership.
(China.org.cn by John Sexton, November 13, 2008)
