Feb. 25, 2010
BOOK REVIEW: 'On the Brink': Former Treasury Secretary Hank Paulson Emerges As First Player in Federal Financial Rescue Effort to Provide First Person Account of What Really Happened in Financial Meltdown
Reviewed By David M. Kinchen
Huntingtonnews.net Book Critic
We had been on the brink but we had not fallen -- Henry M. Paulson Jr.'s thoughts on his last day in office as the 74th secretary of the treasury, Friday, Jan. 16, 2009
If you read former treasury secretary Hank Paulson's "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System" (Business Plus, a Hachette Book Group imprint, 496 pages, photos, index, cast of characters, glossary of financial acronyms, $28.99) -- and I urge you to do so in order to understand the bewildering array of financial bailouts and rescue efforts from early 2008 to just before the inauguration of President Obama -- be sure to read it in conjunction with Andrew Ross Sorkin's "Too Big to Fail." I read the latter book, which came out last October, first, which placed Paulson's memoirs in perspective.
Sorkin's book gives the big picture with a Bob Woodwardish, fly-on-the-wall reporting style that goes into the thoughts of the major players in the biggest financial meltdown and rescue effort -- OK, call it what it really is: socialism for the undeserving rich men who got us into this mess through sheer greed -- since the Great Depression.
Paulson's memoir gives us the details of the bailouts and failures of banks run by the so-called "smartest men in the room" -- and yes, they were all men, leading me to seriously question the financial acumen of my gender.
Paulson himself, a quintessential Baby Boomer, born in 1946 and CEO at Goldman Sachs when he was appointed Treasury Secretary in July 2006, could have been one of the Wall Street fat cats that were rescued had he stayed at Goldman Sachs.
Fortunately for his former firm, Paulson displayed the sound common sense of a true son of the Prairie State (I'm a proud Illinoisan myself) when he ran Goldman Sachs, and the firm avoided the fate of Lehman Brothers, Bear Stearns, IndyMac, Wachovia, Washington Mutual, Citigroup, Fannie Mae, Freddie Mac and AIG -- all run and populated by more reckless individuals.
As he says in his author's note about the book: "The pace of events during the financial crisis of 2008 was truly breathtaking. In this book, I have done my best to describe my actions and the thinking behind them during that time, and to convey the breakneck speed at which events were happening all around us. I believe the most important part of this story is the way Ben Bernanke, Tim Geithner, and I worked as a team through the worst financial crisis since the Great Depression. There can't be many other examples of economic leaders managing a crisis who had as much trust in one another as we did. Our partnership proved to be an enormous asset during an incredibly difficult period. But at the same time, this is my story, and as hard as I have tried to reflect the contributions made by everyone involved, it is primarily about my work and that of my talented and dedicated team at Treasury."
When Paulson, the former CEO of Goldman Sachs, was appointed in 2006 to become the nation's next Secretary of the Treasury, he knew that his move from Wall Street to Washington would be daunting and challenging. That's what Wall Street movers and shakers expect from the job.
But Paulson had no idea that a year later, he would find himself at the very epicenter of the world's most cataclysmic financial crisis since the Great Depression. Major institutions including Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Merrill Lynch, and Citigroup, among others-all steeped in rich, longstanding tradition-literally teetered at the edge of collapse. Panic ensnared international markets. Worst of all, the credit crisis spread to all parts of the U.S. economy and grew more ominous with each passing day, destroying jobs across America and undermining the financial security millions of families had spent their lifetimes building.
The phrase "perfect storm" is an often overused cliche, but it applies in spades to the events that began to unfold in 2007 and continued to the end of Paulson's term in January 2009 -- and continue to this day, judging by the latest "troubled bank" report from the Federal Deposit Insurance Corp. (link: http://archives.huntingtonnews.net/columns/100223-kinchen-columnsfdic.html).
Banking terminology is a topsy-turvy lingo seemingly created by Lewis Carroll of "Alice in Wonderland" fame. Assets to a banker aren't the deposits people put in their checking and savings accounts: These are liabilities to a banker, because they can be withdrawn at a moment's notice. Assets are the loans that bring in interest -- loans that all too often to the players described by Paulson, Sorkin and others included the onxymoronic "toxic assets" based on subprime or no-doc mortgages, extraordinarily risky commercial real estate loans -- and trust me on this, anything involving commercial real estate is risky -- and poor business loans.
Both Paulson's wife Wendy and his active 86-year-old mother Marianna Gallauer Paulson both questioned Hank Paulson's sanity and judgment when he decided to accept President George W. Bush's offer to become the Treasury Secretary in the summer of 2006. His outspoken mom said: "You'll be jumping into a sinking ship." Bush wasn't their idea of a Republican -- I sense Illinois legend Sen. Everett McKinley Dirksen was more in keeping with what a Republican should be to them -- and Wendy Paulson was a college classmate and supporter of Hillary Clinton.
When you're at the top of a Wall Street firm and ready to go on to new challenges, becoming Treasury Secretary for the sofa money salary of your former career is a traditional career arc, so Paulson jumped into the pool -- just as the alligators were assembling.
This was truly a once-in-a-lifetime economic nightmare. Events no one had thought possible were happening in quick succession, and people all over the globe were terrified that the continuing downward spiral would bring unprecedented chaos. All eyes turned to the United States Treasury Secretary to avert the disaster.
"On the Brink" is Paulson's fast-paced retelling of the key decisions that had to be made with lightning speed. For those who wonder about Paulson's writing style, bear in mind that he was an English major at Dartmouth, so he must have learned something about writing. (He later earned an MBA from Harvard, something he has in common with the president who appointed him and who he praises in "On the Brink").
Paulson puts the reader in the room for all the intense moments as he addressed urgent market conditions, weighed critical decisions, and debated policy and economic considerations with of all the notable players-including the CEOs of top Wall Street firms as well as Ben Bernanke, Timothy Geithner, FDIC Chairman Sheila Bair, House Speaker Nancy Pelosi, Barney Frank, presidential candidates Barack Obama and John McCain, and then-President George W. Bush.
Summing up, "On The Brink" is a valuable first-person account of the financial meltdown and subsequent -- and ongoing -- rescue program. It should be read in conjunction with Sorkin's "Too Big to Fail" and books like Mark Gilbert's "Complicit" which I recently reviewed (Link: http://archives.huntingtonnews.net/columns/100210-kinchen-columnsbookreview.html).
About the Author
Henry M. Paulson Jr. served under President George W. Bush as the 74th Secretary of the Treasury from June 2006 until January 2009. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs since the firm's initial public offering in 1999. He joined Goldman Sachs Chicago Office in 1974 and rose through the ranks to the top job at the legendary firm.
Share This Story:
Make HNN Your Homepage (IE Users Only)
BOOK REVIEW: 'On the Brink': Former Treasury Secretary Hank Paulson Emerges As First Player in Federal Financial Rescue Effort to Provide First Person Account of What Really Happened in Financial Meltdown
Reviewed By David M. Kinchen
Huntingtonnews.net Book Critic
We had been on the brink but we had not fallen -- Henry M. Paulson Jr.'s thoughts on his last day in office as the 74th secretary of the treasury, Friday, Jan. 16, 2009
If you read former treasury secretary Hank Paulson's "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System" (Business Plus, a Hachette Book Group imprint, 496 pages, photos, index, cast of characters, glossary of financial acronyms, $28.99) -- and I urge you to do so in order to understand the bewildering array of financial bailouts and rescue efforts from early 2008 to just before the inauguration of President Obama -- be sure to read it in conjunction with Andrew Ross Sorkin's "Too Big to Fail." I read the latter book, which came out last October, first, which placed Paulson's memoirs in perspective.
Sorkin's book gives the big picture with a Bob Woodwardish, fly-on-the-wall reporting style that goes into the thoughts of the major players in the biggest financial meltdown and rescue effort -- OK, call it what it really is: socialism for the undeserving rich men who got us into this mess through sheer greed -- since the Great Depression.
Paulson's memoir gives us the details of the bailouts and failures of banks run by the so-called "smartest men in the room" -- and yes, they were all men, leading me to seriously question the financial acumen of my gender.
Paulson himself, a quintessential Baby Boomer, born in 1946 and CEO at Goldman Sachs when he was appointed Treasury Secretary in July 2006, could have been one of the Wall Street fat cats that were rescued had he stayed at Goldman Sachs.
Fortunately for his former firm, Paulson displayed the sound common sense of a true son of the Prairie State (I'm a proud Illinoisan myself) when he ran Goldman Sachs, and the firm avoided the fate of Lehman Brothers, Bear Stearns, IndyMac, Wachovia, Washington Mutual, Citigroup, Fannie Mae, Freddie Mac and AIG -- all run and populated by more reckless individuals.
As he says in his author's note about the book: "The pace of events during the financial crisis of 2008 was truly breathtaking. In this book, I have done my best to describe my actions and the thinking behind them during that time, and to convey the breakneck speed at which events were happening all around us. I believe the most important part of this story is the way Ben Bernanke, Tim Geithner, and I worked as a team through the worst financial crisis since the Great Depression. There can't be many other examples of economic leaders managing a crisis who had as much trust in one another as we did. Our partnership proved to be an enormous asset during an incredibly difficult period. But at the same time, this is my story, and as hard as I have tried to reflect the contributions made by everyone involved, it is primarily about my work and that of my talented and dedicated team at Treasury."
When Paulson, the former CEO of Goldman Sachs, was appointed in 2006 to become the nation's next Secretary of the Treasury, he knew that his move from Wall Street to Washington would be daunting and challenging. That's what Wall Street movers and shakers expect from the job.
But Paulson had no idea that a year later, he would find himself at the very epicenter of the world's most cataclysmic financial crisis since the Great Depression. Major institutions including Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Merrill Lynch, and Citigroup, among others-all steeped in rich, longstanding tradition-literally teetered at the edge of collapse. Panic ensnared international markets. Worst of all, the credit crisis spread to all parts of the U.S. economy and grew more ominous with each passing day, destroying jobs across America and undermining the financial security millions of families had spent their lifetimes building.
The phrase "perfect storm" is an often overused cliche, but it applies in spades to the events that began to unfold in 2007 and continued to the end of Paulson's term in January 2009 -- and continue to this day, judging by the latest "troubled bank" report from the Federal Deposit Insurance Corp. (link: http://archives.huntingtonnews.net/columns/100223-kinchen-columnsfdic.html).
Banking terminology is a topsy-turvy lingo seemingly created by Lewis Carroll of "Alice in Wonderland" fame. Assets to a banker aren't the deposits people put in their checking and savings accounts: These are liabilities to a banker, because they can be withdrawn at a moment's notice. Assets are the loans that bring in interest -- loans that all too often to the players described by Paulson, Sorkin and others included the onxymoronic "toxic assets" based on subprime or no-doc mortgages, extraordinarily risky commercial real estate loans -- and trust me on this, anything involving commercial real estate is risky -- and poor business loans.
Both Paulson's wife Wendy and his active 86-year-old mother Marianna Gallauer Paulson both questioned Hank Paulson's sanity and judgment when he decided to accept President George W. Bush's offer to become the Treasury Secretary in the summer of 2006. His outspoken mom said: "You'll be jumping into a sinking ship." Bush wasn't their idea of a Republican -- I sense Illinois legend Sen. Everett McKinley Dirksen was more in keeping with what a Republican should be to them -- and Wendy Paulson was a college classmate and supporter of Hillary Clinton.
When you're at the top of a Wall Street firm and ready to go on to new challenges, becoming Treasury Secretary for the sofa money salary of your former career is a traditional career arc, so Paulson jumped into the pool -- just as the alligators were assembling.
This was truly a once-in-a-lifetime economic nightmare. Events no one had thought possible were happening in quick succession, and people all over the globe were terrified that the continuing downward spiral would bring unprecedented chaos. All eyes turned to the United States Treasury Secretary to avert the disaster.
"On the Brink" is Paulson's fast-paced retelling of the key decisions that had to be made with lightning speed. For those who wonder about Paulson's writing style, bear in mind that he was an English major at Dartmouth, so he must have learned something about writing. (He later earned an MBA from Harvard, something he has in common with the president who appointed him and who he praises in "On the Brink").
Paulson puts the reader in the room for all the intense moments as he addressed urgent market conditions, weighed critical decisions, and debated policy and economic considerations with of all the notable players-including the CEOs of top Wall Street firms as well as Ben Bernanke, Timothy Geithner, FDIC Chairman Sheila Bair, House Speaker Nancy Pelosi, Barney Frank, presidential candidates Barack Obama and John McCain, and then-President George W. Bush.
Summing up, "On The Brink" is a valuable first-person account of the financial meltdown and subsequent -- and ongoing -- rescue program. It should be read in conjunction with Sorkin's "Too Big to Fail" and books like Mark Gilbert's "Complicit" which I recently reviewed (Link: http://archives.huntingtonnews.net/columns/100210-kinchen-columnsbookreview.html).
About the Author
Henry M. Paulson Jr. served under President George W. Bush as the 74th Secretary of the Treasury from June 2006 until January 2009. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs since the firm's initial public offering in 1999. He joined Goldman Sachs Chicago Office in 1974 and rose through the ranks to the top job at the legendary firm.
Share This Story:
Make HNN Your Homepage (IE Users Only)
