Former Nixon White House Aide Named Treasury Secretary
(Henry M. Paulson, Jr. was chairman of the Nixon Library and Nixon Center’s 2000 tribute dinner honoring Maurice R. Greenberg in Washington, D.C.)
The New York Times:
Henry M. Paulson Jr. was just a few years out of business school in 1972 when he landed a coveted job on the White House staff for President Nixon. His friends at the time couldn’t believe it. Yes, he had a business degree from Harvard and was also an all-Ivy tackle for Dartmouth, but, after all, he was just 26 and new to the ways of Washington.
“I was the top of my class at Harvard Business School and I was magna cum laude at the law school, and they picked the football player from Dartmouth,” said Walter C. Minnick, whom Mr. Paulson beat out for the job and who is now chief executive of a landscaping company in Idaho.
“He was a bulldog, very much like a young Dick Cheney,” said Mr. Minnick, who remains one of Mr. Paulson’s closest friends. “Hank is a salesman’s salesman, and this combination of being tenacious as well as enthusiastic made him very effective.”
Indeed, it was this very same blend of wide-eyed vigor and hard-edged ambition that fueled Mr. Paulson’s 32 years at Goldman Sachs, pushing him to the top job of perhaps the most widely admired firm on Wall Street and leaving him with a net worth of more than $700 million.
A committed environmentalist and bird watcher whose brand of Republicanism recalls both the open-plains enthusiasm of Theodore Roosevelt and the pragmatism of Richard Nixon, Mr. Paulson is in some ways an executive in the mold of Paul H. O’Neill, the former Treasury secretary who was forced out by a White House that could not abide his contrarian tendencies.
Mr. Paulson follows Jon S. Corzine, the Democratic governor of New Jersey, who was pushed from his job as senior partner at Goldman in 1999 by Mr. Paulson and other top partners at the firm, as the latest in a long line of Goldman executives to heed the call of public service.
Like Mr. O’Neill, Mr. Paulson has strong views on economic policies that support balanced budgets, which may not match up with the Bush administration policies that have contributed to historic budget deficits.
Now, with the stock market showing signs of weakness and the dollar continuing to decline, the Bush administration is reaching out to a seasoned Wall Street executive to bring calm and predictability to increasingly uncertain markets.
It was just such a role that President Clinton, desperate to bring financial gravitas to his young administration, carved out for Robert E. Rubin when he persuaded him to give up his job as senior partner at Goldman for a career in Washington.
Mr. Rubin preached balanced budgets and a strong dollar during a time of broad economic health, and achieved near celebrity status in the process. Now the question is, Will Mr. Paulson be able to perform a similar trick?
“He is a person people have confidence in,” said Mr. Rubin, who has spoken out against the administration’s economic policies and the large deficits that they have created. “He is a very good choice, but it’s a very difficult job.”
Mr. Paulson became co-chief executive of Goldman in 1998, shortly before the firm went public. He was one of the first chief executives on Wall Street to recognize the extent to which investment banks could enhance their profit by making big bets with their own capital as opposed to acting as mere intermediaries. And Goldman has had a remarkable string of strong profits.
But by stubbornly asserting Goldman’s right to invest in, advise on and finance deals, regardless of potential conflicts, Mr. Paulson has also stirred the ire of many on Wall Street who contend that these conflicts, while mostly aboveboard and beyond regulatory approach, are sometimes too clever by half.
Despite his wealth, Mr. Paulson does not cultivate the airs often seen in top financiers. He prefers bird-watching in Central Park to golf and flies back as often as he can to a small farm in Barrington, Ill., located next to his parents’ house, that he and his wife, Wendy, bought in 1974.
Mr. Paulson was born on March 28, 1946, in Palm Beach, Fla., but was brought up in Barrington.
At Dartmouth, he received his bachelor’s degree in English in 1968 and, despite being one of the smaller tackles in the league, was named first team, all-Ivy. He finished business school in 1970 and headed to Washington, where he worked in the Pentagon before he made his move to the White House, working on John D. Ehrlichman’s staff.
After four years of working 90-hour weeks in Washington, Mr. Paulson made his move to Goldman Sachs in 1974, starting out as a junior investment banker based in Chicago.
Goldman bankers who worked with Mr. Goldman speak of his dogged persistence in pursuing the region’s largest companies, like Sears and Kellogg.
“He loved going after the big fish,” said Robert J. Hurst, the former vice chairman of Goldman to whom Mr. Paulson once reported. “He was very good at getting business.”
Mr. Paulson’s ability to lure big clients got the attention of Goldman’s brain trust in New York, and by 1990 he had become co-head of investment banking and a member of the firm’s management committee.
In 1999, after Mr. Corzine’s departure, Mr. Paulson was the near-unanimous choice of Goldman’s top partners to be the firm’s chairman and sole chief executive.
While Mr. Paulson was successful in keeping Goldman mostly free from the taint of Wall Street scandals, his rectitude has caused him and the firm a few embarrassments.
During the uproar over Richard A. Grasso’s compensation as chairman of the New York Stock Exchange, Mr. Paulson was energetic in coming out against Mr. Grasso’s package even though he was on the board that voted in support of it. If the case proceeds to trial, Mr. Paulson is expected to be a central figure.
Goldman’s role as both an investor and adviser to the New York Stock Exchange also caused a stir when the exchange merged with Archipelago. Many on Wall Street saw Goldman’s many strands of influence as both unseemly and unnecessary. And Mr. Paulson’s proposal to the Goldman board that the firm donate 680,000 acres of land in Chile to the Nature Conservancy elicited protests from shareholder activists who claimed Mr. Paulson was putting his own environmental passions ahead of the firm’s corporate interests.
Described by those who know him as a man who bleeds Goldman blue, Mr. Paulson, like other top partners before him, has became steeped in the culture of the firm, which places as important an emphasis on pursuing a career in public service as it does on reaping extraordinary riches. Senior partners at the firm, including Sidney J. Weinberg, John C. Whitehead, Mr. Rubin and Mr. Corzine, and more recently Stephen Friedman, all pursued careers in Washington.
“Sidney Weinberg made it explicit that public service was a higher calling,” said Lisa J. Endlich, the author of “Goldman Sachs: The Culture of Success” (Touchstone, 2000), a history of the firm. “It’s like being a member of the Kennedy or Bush family — it’s generation after generation.”
Like other Wall Street executives, Mr. Paulson was a generous donor during the 2004 campaign, raising at least $100,000 for the Bush campaign. Even so, despite being among a core group of Wall Street executives whom Mr. Bush called upon for advice, Mr. Paulson had, until now, spent little time alone with him.
Early this spring when Joshua B. Bolten, a former Goldman Sachs executive, reached out to Mr. Paulson about taking the job, he was receptive, though he had his doubts about how involved his role as an economic policy maker would be, according to people who were involved in the discussions. By all accounts, Mr. Paulson was also having the time of his life. Goldman’s stock was at an all-time high, as was Mr. Paulson’s influence, as he maintained his usual full-tilt schedule, meeting with top political leaders in China, the Middle East and Europe.
But when the White House called again late this month and invited him to a private meeting with President Bush, Mr. Paulson began to think more seriously about the job. On May 20, a Saturday, he flew to Washington for a private meeting with President Bush, held in the White House residence. The one-on-one meeting lasted two hours, and Mr. Bolten sat in for a third hour.
It was during this meeting that Mr. Paulson was assured that he would not be a mere salesman for the president’s economic policies, but an active participant in the formulation of policy, said people who were briefed on these discussions.