Grubstakers - Episode 34: Hank Paulson and the 2008 Financial Crisis

Episode Date: September 24, 2018

Join us as we discuss the many misdeeds of Henry Paulson. From his time at Goldman Sachs wrestling his boss to the time he let his pet raccoon roam free in his house listen to all the silly adventures of the Paulson saga. We also discuss how as CEO of Goldman Sachs he helped create the 2008 financial crisis through the selling of fraudulent mortgage backed securities and the purchasing of credit default swaps on them from AIG then operated the bailouts in a way to cover up his role in the crisis. Less silly.

Welcome to Grubstakers, the podcast about billionaires. This week, on the 10-year anniversary of the 2008 financial crisis, we are talking about one of the potential billionaires most responsible for that crisis, former Secretary of the Treasury Hank Paulson. Hear all about how, during his time as CEO of Goldman Sachs, he turned it into an openly criminal organization and then continued his work for Goldman Sachs during the time he was George W. Bush's Treasury Secretary. Hear about how he appointed Goldman Sachs officials to run AIG and operated the bailouts in a way that benefited Goldman Sachs,

and about how he doesn't believe in medicine and heals himself through prayer like many other Americans. All that and more coming up on Grubstickers. feeling targeted for your race. I am proud to be gay. I am proud to be a Republican. You know, I went to a tough school in Queens and they used to beat up the little Jewish boys. You know, I love having the support of real billionaires. In five, four, three, two. Hello and welcome to Grubstakers, the podcast about billionaires. We're back. Sean P. McCarthy here, joined by... Steve Jeffries.

Yogi Poyol. And Andy Palmer. And this week, we're taking a look at Hank Paulson. Hank Paulson, the former Treasury Secretary of the United States, former CEO of Goldman Sachs. And we're also taking a look at the 2008 financial crisis more generally. We were just past the 10-year anniversary. On September 15, 2008, Lehman Brothers filed for bankruptcy, setting off the whole financial meltdown. And we just passed this 10-year anniversary point. And really, Hank Paulson, his entire thing is,

it could have been worse you know like he's been on this kind of tour for a few years now where he's like oh things could have been a lot worse with the 2008 meltdown and it's like well 9.3 million people got foreclosed on and donald trump is the president right now so it's like how could it be worse how much worse it's a pretty good defense because you could say that after committing any crime you know i mean like hey i only murdered seven people it's not eight it could have been worse like it's a perfectly good way to make yourself seem not nearly as bad as you truly are yeah and uh and like even hank paulson will acknowledge this just like a few different statistics but uh the largest

10 banks in the united states held about 10 percent of banking assets in 96 by 2006 when he became treasury secretary under george w bush they held about 50 percent of banking assets today it's over 77 percent wow so it's like their entire strategy for combating this financial crisis was to create these even more mega private banking corporations and then even today they tell us that nationalization would have would have been worse and it's like again 9.3 million foreclosures the majority of which were fraudulent right right so it's like what what the fuck is their definition of worse when the government does things hey i could have lost money on this deal it could have been worse

and it's just like there's really two interpretations of Hank Paul since you're in the financial crisis. It's like either he just ran around like an idiot with his lack of hair on fire, you know, like just doing things at the last minute and not looping in British regulators that he was trying to get Bar know anything was going on and he didn't, or that he acted in a way that was perhaps corrupt and beneficial to his old firm, Goldman Sachs, where he helped inflate the very crisis that he would be tasked with solving by selling all of these fraudulent mortgage-backed securities and then getting credit default swaps against them from AIG financial products. So it's like either he's a corrupt, either he's an idiot, or he's just blinded

by ideology. Whatever the case, again, an impressive track record of destruction. We must all admit. Have you guys ever been in a situation where you're, like, leading something and then, like, you're seeing the storm about to hit, but no one's listening to you? Have you ever been in that situation?

Well, in a profound sense sense i'm assuming the crisis like destroyed most of this pod's life so though speaking of which like it is something where it's like it's kind of tiring to like do these financial episodes because it's complicated it can be a lot of work they're very dense trying to explain it and, I can do that. Trying to explain it. But it does take back when we were first starting this, well, I had the idea. I wanted to call the podcast Kill the Bankers. And had we done that,

we'd probably have maybe a thousand listeners. Okay, let's not get too crazy here. About half of them would be state and federal prosecutors. But it is something where it's like i should be clear there's a lot of people in this story of the 2008 financial crisis who deserve to die but i should be very clear i would never advocate extrajudicial murder of any of these no no no

of course not i would suggest rather that in some sort of post-revolutionary government there would be a people's tribunal at which i would sit as a Chairman Mao-like figure and have these people's family members execute them in order to prove loyalty to my new revolutionary state. Now, this people's tribunal, who else is on this board with you? Mostly me.

A couple of figureheads that I have scared into submission. But yes, I mean, this is obviously, as we all know, true socialism. Yes, Sean being on the board that decides who kills who is socialism. I'm reading the biography of Mao, Chairman Mao. Not shocking, by the way. I will say he is an inspiration to fail sons everywhere. Because he accomplished basically nothing

until his mid-30s and just read a lot of books and sat around the house and didn't want to work. And then he went on to kill more than 70 million people. Wow. So you can do it too,

if you're listening. As someone whose favorite movie is Office Space, this gives me a lot of hope. Really, he did nothing until his mid-30s and read a whole bunch of books and then not really yeah he essentially just kind of got in on the uh the communist uh movement and then he got the communist party of russia to bankroll him to set up a bookshop to distribute communist propaganda and then he essentially ran off with an army of communists during an uprising and ran off to the the mountains with this army and because

he had this army he was able to consistently use that to negotiate a better and better position for himself right right right um but yeah it's a fascinating story but uh neither here nor there to kind of returning to hank paulson um hank paulson uh on the topic of averted malice let's get back to hank paulson and the bank bailouts and all that jazz. Yeah. So Hank Paulson, as far as like net worth goes, he became, again, CEO of Goldman Sachs from 98 to 2006. He becomes the U.S. Treasury Secretary in 2006. And at this point, he has to sell off his Goldman Sachs stock because, believe it or not, in government we used to

have the idea that you were supposed to divest yourself. Fortunately, the electorate has soundly rejected that. But so he sold about $500 million, thereabouts, of Goldman Sachs stock in 2006. And because of another law that said that if you sell stock to become part of the government, you don't have to pay capital gains taxes on it, he was able to save anywhere from $30 to $200 million in state and federal capital gains taxes. So this was a huge windfall. And he also managed to empty all his Goldman stock right before the bottom fell out.

So he was worth at least $700 million in 2006, and we can't really find a source, but I think it is reasonable to assume that he has since become a billionaire just based on the usual 7% to 10% annual appreciation of capital. Yes, we couldn't find a source because all of them kept getting murdered. And also his son owns the Portland Timbers MLS team

Boo And this is the worst part About the Paulson family Besides his deformity Is what we really hate about him And his other son RuPaul Continuously carries out

Illegal drag racing Too dangerous. Flaunting it on major television networks. This is how Paul Walker was killed. Yes, but just one brief thing on the Portland Timbers MLS team. This is from the Reddit MLS board. The greatest investigative journalists

in all of Reddit. But they found that it's... Sean, we made a rule not to be... not to let there be overt sexism on the podcast. Quoting Reddit. Seems to be walking right into a bear trap on that front. In between all of the upskirt photos, I have managed to find

some incredible investigative journalism uh on the reddit mls board but so basically they found that the portland timbers are owned by peregrine sports llc which is kind of a black box llc where hank paulson the former treasury secretary is the major principal investor uh and then that his son merit who owns, who owns the Portland Timbers, basically got all of his money from Hank Paulson, his father, to buy this team. So Hank Paulson certainly has some sort of stake or ownership in the team. It's named after a bird, and he's an avid bird watcher. Oh, the Portland Timbers. No, Peregrine.

Oh, yeah, Peregrine Sports LLC. But yes. Mind you, his son and himself and his father all named Henry. It gets a little confusing when you're researching them. It's like, which Henry do you mean? That's why his son goes by Merritt. Just for clarification, a timber is not a bird,

but it is actually a tree. Well, thanks for clarifying. Sean seemed to have some confusion on that point. A timber is a generalized word for a tree. Oh, okay. Well, I was just going to post the correction in our Tumblr, but I guess we took care of it here. But yes, his son is called Merritt,

and that is not how he bought the Portland Timbers. But so before we get into just kind of like the bio of Hank Paulson himself and just like the financial crisis more generally, I do just want to mention something that I have mentioned on this podcast before, but it's worth going over because nobody ever talks about it in the general mainstream corporate, whatever media you want to call. But we tell the truth exactly it's essentially mortgage electronic registry survey and this is something that was set up by the banks and tell me sean the 1990s um to essentially allow them to do their mortgage securities yeah and so uh basically when you're doing a property transfer you're supposed to go to public records and spend about 30 bucks documenting in the public that

you're transferring your property from this person to this person but because the mortgage-backed securities were flipping around Wall Street banks so much they just thought it would be easier if they set up their own internal system called me RS which tracked internally all the transfers, the back and forths that the Wall Streets were doing. And then, of course, this allows them to... There's just one Wall Street. Yes. I'm sounding like Sarah Palin here. But this, of course, allows them to save the $30 fee every time there's a transfer and, you know, et cetera, et cetera. And also, because it's now a

black box. So you just kind of... There's more than 70 million mortgages in America that are registered with MERS. And you just kind of have to trust that the bank that attempts to foreclose on you actually owns it. Because they have not been transferring your property the proper way through public records. Instead, they've just been bouncing it around their own little black box internal system. So it is argued by a lot of very smart legal people that these 70 million mortgages... Those are called lawyers. These 70 million mortgages under MERS

have no legal standing to foreclose and that there was a lot... And this is where robo-signing comes from where they faked up all these documents to do foreclosures. So again, we mentioned the 9.3 million foreclosures, but it's just something where it's never really talked about in terms of the financial crisis is that almost 10 million people lost their homes and probably the majority of that was completely illegal and it was all just swept under the rug by people like Hank Paulson. RoboSigners is also what the deaf called subtitles. But, yes, so Hank Paulson...

Wait, so they did all that to avoid a $30 fee? That was the whole gambit? Well, on every transfer. So it's like if you're swapping these things back and forth 20 or 100 times, that adds up. And also, like, you know, yeah, the fee was part of it, and then there were also... It allowed them to kind of shield what they were doing from regulators. They could have had to spend up to $3,000.

You gave. But, you know, if you have, like, thousands of mortgages packed into, like, one security and you're bouncing them around, it does kind of add up. It does save you a lot of money. Yeah. But, again. Save you a lot of money yeah yeah um but uh save you a lot of the fake money you're creating right right under the during the great depression you know fdr set up the holc homeowners loan corporation which bought up like a million distressed mortgages and like kept people in their homes and we just we really didn't have that under

either obama or paulson we we had like a mishmash of programs that were like, hey, sit down and have a conversation with your lender. And maybe they'll be nice to you. Better education. We foamed the runways. We foamed the foreclosure runway. And because of all the foam, people couldn't

foreclose as fast because in aviation, foam slows down airplanes. And that's what we're doing. We're slowing down the airplane that you're still homeless but we filmed the runway. Yes. So unfortunately...

I like to think the entire conversation was, hey, you gotta tell them that they're still homeless. 90 minutes of foam runway. Mr. President, remind them that they're still homeless 90 minutes of foam runway uh mr mr president remind them that they're homeless now uh foam is uh very comfortable to sleep on you know lots of people would love to sleep on foam have you ever thought about this many mattresses in fact are made out of foam insulation memory foam uh which you uh cannot afford you'll be homeless but you'll remember it for a long time.

You'll get to think about airplanes, and those are pretty cool. Yeah. And so Hank Paulson has the voice of a man who should have died of emphysema 10 years ago. He really does. And he spent most of the financial crisis dry heaving in meetings. He also has a face that adds graininess to high-definition cameras. It's a real punchable face. Yeah, I don't know what it is,

but he's just got like specks built into his face. It's Christian science, actually. Yeah. All natural. We'll get into it. Yeah. Oh, he's a Christian scientist? Yes, he is a Christian scientist.

Oh, that's why he was dry heaving. Okay. Yes. He doesn't take medicine. He didn't take kindly to Western medicine. Yeah. Oh, he's a Christian scientist? Yes, he is a Christian scientist. Oh, that's why he was dry-keeping. Okay. Yes. He doesn't take medicine. He didn't take kindly to Western medicine. All he needs is a reading room and time. But before we move on to Hank Paulson's kind of chronological biography, I thought maybe the former chairman of the Federal Reserve could explain the 2008 financial crisis to us and our listeners.

And maybe we can just comment on any other thoughts we have on the financial crisis before we go back in time a little bit. This is taken directly from a reel-to-reel tape that was in the room at the time. Okay, this is Federal Reserve Chairman Ben Bernanke. I spent my entire academic career studying the Great Depression. Ben Bernanke. of credit. Average citizens unable to borrow money to do anything to buy a home, start a business, stock their shelves. Credit has the ability to build a modern economy, but lack of credit has the power to destroy it

swiftly and absolutely. If we do not act boldly and immediately, we will replay the depression of the 1930s. Only this time, it will be far, far worse. We don't do this now. We won't have an economy on Monday. and uh uh hank paulson was actually in the room and had this to say in response i know i fucked up i know i did a bad thing all right and i know i'm a bad person i know i am

but you gotta help me you have to help me Okay? Tell me you'll help me. If I lose Christina, I am nothing. Miles is Ben Bernanke's nickname. Christina is what he calls his fortune. I thought it was interesting when Ben Bernanke assured EZE that he did not steal money from him. That was, of course, Federal Reserve Chairman Ben Giamatti in the hit HBO documentary Too Big to Fail, which is based on the Andrew Ross Sorkin book that tells the events. And there's been a lot of stuff online about how different participants basically just lied to Andrew Ross Sorkin.

Oh, really? And because he's like, he found a couple things that were interesting, which we'll get into. But, you know, he's a kind of a deal book New York Times journalist who just credulously copies down what the rich and powerful tell him

without too much dispute. But yes, we thought that really was the best explanation. I could have used probably 18 more descriptions of what people do with money. Ben Bernanke went on to say, this could be the worst thing since I tried to fire Howard Stern. They get hot pockets. People can't howard stern they get hot pockets people can't go out and get their hot pockets they can't they're just locked in their rooms they get wine

but they don't get any fucking merlot um but so uh hank paulson um has got had a uh interesting career he was born uh relatively wealthy though it it is not exactly easy to find much information about his early life. Which is a problem with billionaires that we've been talking about since episode one. Yes. That they're shielded by their wealth and they allow their history and past to be hidden from the common folk like you and me. Yeah. Speaking of which, listeners, here's your challenge. Find more than three sentences

about the time Hank Paulson spent in the Nixon White House. For some reason, all of his official biography documents are rather scarce on this point. Oh, really? Who did he work for in the White House? Was it Haldeman?

I think he worked for Ehrlichman. Ehrlichman? Same person. Yes. He was the assistant to E ehrlichman from 72 to 73 ehrlichman would of course uh later go to prison he uh hank paulson drove the bus that nixon threw him under um but so uh so yeah so hank Hank Paulson is born in Florida in 1945. He has two younger siblings, but he's raised on a farm in Illinois.

In Illinois. Sufi and Stephen's album over here. His father, Hank Paulson describes his father as a taskmaster. And this is from the book Money and Power, How Goldman Sachs Came to Rule the World by William Cohen. Quote, much of Paulson's early life revolved around his family's 75 acre farm in Barrington, Illinois, about 40 miles

west of downtown Chicago. We always had horses, hogs, cows, sheep, and chickens, not to mention my pet raccoon and crow, Paulson wrote in his 2010 memoir. Pet raccoon, that's pretty adorable. Yes. That might be my favorite billionaire adorable fact so far.

Paulson talks about how his wife kind of tolerated him letting the raccoon run around the house. And I was like, oh, that's the story of why my children are now blind. Their poop does make you go blind Yes But so yes Paulson Not the raccoon

One time the raccoon bit him And because they're Christian scientists They didn't get intrigued Until the last minute Yeah And so They prayed it away Yeah being a Christian scientist

Must save you a lot on veterinary bills But so That boy loved that raccoon actually he spent hours in his room with him uh no one understands me like you only you understand the importance of cds's i will say i will say the few black uh colleagues he's had have had issue with him using the word coon constantly that's been problematic they don't understand his upbringing they don't they don't understand what he went through and what that raccoon gave him he was like no many of my friend paul giamatti's clients are black so it's okay

um but so yes like uh and he describes this early period of his life is where he really got into like uh he wanted to be a park ranger i guess up until he went to college uh you know later with goldman sachs he would go into a bunch of conservation non-profits which again like man i fucking love how like fucking folksy the dreams of billionaires are before they decide to destroy the world it's like i wanted to be an author or, I don't know, I thought I'd be a marine biologist for Aquarium. It's like, fucking, and then all of a sudden I realized I needed money

to do shit and then the world had to burn. Right, I mean, it is funny, like his career at Goldman, like, just being the very lubricant in the gears that are melting the planet to death and being like, yeah, occasionally I pick up garbage in the forest, so I'm doing my part.

I mean, Greenspan played the clarinet before he became an economist. Free. That's fucking crazy. He wanted to be a park ranger. Greenspan played the clarinet. Yeah, he played jazz clarinet before he became an economist.

That's one thing he shares with Woody Allen. Well, I know what he would have been doing on the Titanic. Throwing women out of the lifeboats. Will you get a seat? I have a child! You didn't read it all. The band boards the life raft first. It would be an unfair government intervention

if we moved the wheel away from this iceberg. But so the early life of Paulson, and then it is just kind of like, again, 75-acre farm in a relatively prosperous area of the country. 75 acres is a big chunk of land. It's like two sizes of the country. 75 acres is a big chunk of land. It's like two sizes of the Pentagon. Yeah. We spent 10 minutes calculating this for you.

I got really into it. Trying to figure out what 75 acres is equivalent to or closest to. Yeah. 12 are you not entertains. Yes. Totally unrelated, but Andy Palmer did not take his ADD medication this morning.

I did, but it was canceled out by staying up until 4 playing Cripple Space Program. So the 75-acre farm, his wife and him would later go on to buy five acres of that from his parents, the way we all do, to build their house and raise their kids there and have the raccoon run around and stuff. So he had a relatively privileged upbringing, certainly.

You already live on a farm. It's really hard to lie to your children about your dog dying. I want the audience to know the raccoon part Sean just said is fake He's not buying five acres so raccoons can run around As adorable as that sounds No he said this in an interview Wait really he said that? Yes he said that his wife tolerated him allowing a raccoon to run throughout their house

Like a fucking Disney movie where he's the villain The animal needs a lot of space though fucking Disney movie where he's the villain. The animal needs a lot of space though. It's so sweet. It's like a dog that's not trained and doesn't have any self-control. It's sharper teeth. And when he went to Goldman, he tried to bring your raccoon to work day.

Hank Paulson was like, the hardest thing of our childhood was listening to cinderella constantly begged to be let out of the basement uh but so um uh he goes to dartmouth uh and he gets an english degree uh he plays safety ivy yes he plays on the football team at dartmouth which is where he fucks up his pinky, which if you watch the Netflix documentary that he commissioned, which is a complete fluff piece and a total waste of time, and you should not watch it except for the part where you keep looking at his fucked up pinky and being like, is somebody going to do something about that?

Because I should not have to watch this on a high definition television yeah in the interview he talked about the finger got dislocated and the coach pulled it out and jammed it back in and uh it's been fucked up since i like the idea of hang paulson being like yeah for some reason the football player who uh messed up my pinky would later go on to murder suicide his wife i'm not sure if there's any sort of connection there yeah paulson's everything that paulson did as a billionaire is just like a version of cte violence yeah like they were totally unaware aig was in trouble until the weekend that lehman went bankrupt and yeah i like the idea that it's just like CTE and like lack of memory,

where he constantly assures people we're doing things about the financial crisis. Meanwhile, he's just like looking at birds and shit. I just black out and drive the economy into the ground. He's like a regular decent person, but then he just looks at the pinky, and the pinky starts taking control. But so he meets his wife in college wendy they've been married 30 some years uh you know and it's like this would later he's a pretty uh at least by his own account everything we can tell a pretty straight and narrow guy doesn't drink doesn't smoke doesn't take a medicine of any kind he's a christian scientist. His body's a temple.

Exactly. But so he meets his wife, Wendy, in college. He gets his English degree, and then he later goes on to Harvard Business School to get an MBA. He gets married at this time, and they get their little farm on his family's farm. And then he goes on to a job at the Pentagon in June 1970.

Which he feels is small because he's used to it. Twice the size. When he showed up there, he's like, this is only 2.5 times the size of where I grew up. He's like, where are the raccoons here? Far too little wildlife for me to be in a space of these dimensions. It's like, you know, we could knock out a wall and really grow this thing. And then on 9-11, he cut this yogi.

I got where you're going with that. I picked it up. I'll work it out. His time at the Pentagon He was measuring dimensions to see Where the best place for a cruise Missile strike would be But so yes

He gets a job at the Pentagon and then like He writes in his biography and they talk About it and this is a tangent by the way The day before 9-11 Rumsfeld Gave a speech to the Pentagon about how they really needed to downsize and cut out the bureaucracy god the himmler parallels are really eerie with rumsfeld like wow that guy that guy had a powerful vision board. Oh yeah. Came true. But so, yeah.

So he writes about this in his biography and they talk about it in the Netflix doc. But ironically, during his time at the Pentagon, he works on a bailout for Lockheed, the weapons contractor. Again, you know, this is Nixon. So during the Vietnam War... This is before Lockheed met Martin. Exactly. During the Vietnam War's uh they're having some some trouble financially and

then the nixon white house decides lockheed is like essential for national security or whatever so um we have to bail it out so there's like a a debate but in his capacity at the pentagon paulson helps the lockheed bailout and it's like, oh, this is my first bailout or whatever other folksy story the 70-year-old with a billion dollars tells you to try to humanize themselves. Like, yes, I bailed out this company that was incinerating orphans in Vietnam.

Yeah, he left out the part where Nixon took him aside and was like, listen, without Lockheed, we can't bomb all the shit-ass countries we want to bomb. We can't kill those kids without Lockheed. Paulson's quotas being like, but we're not going to hurt the raccoons, right? And then Nixon said something

that would later be an expletive to lead him. He misheard what Paulson was saying His first conservation program Removing 2-3 million Wasteful and polluting human beings From the countryside of Southeast Asia

That's why today People are like you know who else Loved animals Paulson Hey Hitler was a vegetarian Paulson was raccoons Well not to go too much In the Nazi thing but Paulson. Hey, Hitler was a vegetarian. Paulson loves raccoons. I mean, the similarities, really. Well, not to go too much in the Nazi thing, but Paulson...

Oh, really, Sean? Not to go too far into that world? I know it's out of character for me to talk about the regime in Germany from 1933 to 1945, but at frequent points, Paulson really does sound like Albert Speer or something, where he's like, look, there's nothing we could have done and also I didn't know that but so he

as a result he says as a result of his work on this bailout for Lockheed he gets noticed by the Nixon White House he comes to the Nixon White House April 72. He leaves December 73, right around Watergate is breaking.

But so, and he works as, as we mentioned, he works as an assistant to John Ehrlichman, but he just doesn't talk about that. And, you know, you spend some time Googling and you hit a dead end. But who knows what things he learned that would later benefit him at his career at Goldman Sachs from that particular period. And the president takes him aside and is like, Hank, neither of us are Jews.

And I think that's an important skill. You can't trust these people, Henry. But, so he leaves in December 73. He writes a letter saying, I am leaving. I appreciate the time here at the Nixon White House, but I got a job, an investment banking job with Goldman Sachs. It's a stock boy. Yes. So he starts. Work his way up. Yeah. He starts January 1974. He works out of the Chicago office of Goldman Sachs. And he's kind of like remembered as like

a workaholic. Again, just quoting from the book Money and Power by William Cohen. He joins Goldman Sachs and Investment Banking Associate, January 1974. He was covering big industrial companies in the Midwest. Quote, his early years at Goldman were tough, but then he started getting a few breaks. I was candid sometimes to the point of bluntness, recalls Paulson. That

was my trademark. For a young banker without much experience, he had a lot of chutzpah. Sometimes clients would ask him to give them a breather and not call so often But the word began to spread around Goldman that nobody worked harder and his frugal Frugality and family values Paulson didn't drink smoke or chase women played well with upper management To be sure sure, but he did ask a lot of customers where his hug was. He was relentless. Wouldn't stop calling.

At all hours of the night. He did frequently slap aspirin out of people's hands. Call it Satan's temptation. Oh, yeah. To be sure, Paulson was no Boy Scout, and he made plenty of enemies at Goldman. Also, he was a Boy Scout. Yeah, he was. I mean, he was literally a Boy Scout,

but he was also no Boy Scout. Well, he was, like, a huge Boy Scout. Well, yeah, so he got the Distinguished Eagle Scout Award, apparently, which is something that you get for doing something distinguishing after getting Eagle Scout. It's like an Eagle Scout postdoc. Yeah, it has nothing to do with doing extra work in the Eagle Scout. You just happen to do something notable within 25 years of getting Eagle Scout.

And in his case, it was having a shadowy position in the most corrupt presidential administration in documented history. Yeah, so an Eagle Scout, a distinguished Eagle Scout. Yeah. That's crazy. They made like a deluxe version of Eagle Scout for rich people. Yeah. For no reason, really. I mean, who goes, oh, you're an Eagle Scout, but are you a distinguished Eagle Scout?

What badge is that? It's the Tank the economy merit badge it's achievement unlocked yeah full disclosure I'm an eagle scout it's not that hard now Henry if you do this for me I think I can put in a word with the boy scouts

now we have connections but we gotta take these motherfuckers heads off do you hear me henry uh but so um basically he works out of the chicago office oh yeah and then just a colleague on background uh he says paulson is an action-oriented person and one of his great skills with is was identifying smart people and absorbing good ideas they had then pulling the trigger and uh pulling the trigger the biographer writes this person was choosing his words very carefully where paulson was kind of known even

on wall street as the snake which uh i mean again quite the distinction on Wall Street. What was his first experience with identifying smart people and then pulling the trigger with Gordon Liddy? His nickname was The Snake? Yes, his nickname was The Snake on Wall Street. Boy, to be nicknamed The Snake on Wall Street. What a low high honor right there interestingly enough there's a forbes profile in 2004 which describes him uh on some like uh he was out in nature like driving in a truck and then with the raccoon one of his assistants pointed out a snake

and hank got very excited and had them stop the car and went where where and like bounded out trying to look for the snake and then they quote his his wife, Wendy, as I'm paraphrasing, but being like, yeah, no, Hank likes to pick up snakes and look at them. And he gets very fascinated. And I just kind of knew by the look on his face that it was one of those snake days. I'll be honest.

To me, that's one of the more endearing things about it. I mean, look, I don't doubt. They're very misunderstood creatures. I love that his wife knows that some days are snake days that to me that's a loving marriage right there like i might steal that i'm calling it hank eats butt that's a loving marriage all right some days are snake days you don't get you don't get to live snake day days without a little bit of butt play from time to time um but so uh yeah and it's like yeah i don't get to live snake day days without a little bit of butt play from time to time. But so, yeah. And it's like, yeah, I don't doubt that the guy's like really fascinated with nature watching

and all this stuff and him and his wife go on trips to like Brazil and other exotic destinations, particularly to see the wildlife. But it's like, again, you're one of the rainmakers in global capitalism, which is going to extinct all life on earth in about a hundred years. You can be evil and have neat hobbies. Like it's not like one of the most famous,

uh, rocket engineers in human history. Wasn't also an SS officer. Oh, that is true. The boy loved rockets though. Yeah. he was really into rockets and slaves but also rockets his early nasa program to destroy the suburbs in london so this is how we're gonna do it it's gonna be with rockets um but so uh basically what happens in 1994 so he works his ass off in the chicago office as an investment banker he builds a reputation for himself um and then in uh night

starting in 1990 he was one of the three heads of investment banking at goldman sachs and then in 1994 the ceo of goldman sachs the time, a guy named Friedman, he wants to step down, partly for health reasons, partly because Goldman is having a bad year in 1994. And so it's kind of controversial that he wants to step down in the middle of this bad year. But he wants to put Hank Paulson in charge, but he knows the board won't quite go for it. So he gets this other guy, John Corzine, who would later go on to be a corrupt senator and governor from New Jersey, who would also be charged. defrauding investors in his post-governorship career back in finance again and banned for life from financial trading uh just an absolute uh snake who's unfortunately only worth several hundred million dollars so it was the safe bet exactly um so basically that uh john corzine was

um the kind of like one of the hot shot traders, whereas Hank Paulson was an investment banker. And it's kind of like common in finance or Goldman or whatever. There's kind of, let's say, a rivalry between the traders and the investment bankers. So this is kind of like a situation where they set up two heads on top of the totem pole in order to make everything better. And this lasts from 94 to 98. on top of the totem pole in order to make everything better, you know.

And this lasts from 94 to 98. But so just kind of an interesting thing about how Paulson was able to get the CEO of Goldman, this guy Friedman, at the time to really look up to him as his successor. Again, this is from the biography. Paulson had always cultivated Friedman. The two were friends, having found common ground as athletes. Indeed, at an off-site in New York's Westchester County a few years after Paulson had joined Goldman, Friedman, once a national wrestling champion at Cornell,

challenged Paulson, a former All-American lineman at Dartmouth, to a wrestling match. Paulson had done some intramural wrestling at Dartmouth, but he hadn't really wrestled since he was 18. Still, he took one look at Friedman who was smaller and lighter and felt a bit sorry for him. Unbeknownst to him,

however, Friedman was still working out regularly with the Cornell wrestling team at the downtown athletic club. So I took, so I took him down very quickly. Fox catcher shit. So I took him down very quickly wither shit so i took him down very quickly with uh the fireman's carry paulson recalls the next thing i knew i was on my back

i'd never been pinned before so i got angry i thought this little guy i don't care if he is my boss i'm going to pick him up and i'm going to hurt him i went back at him about five or six times and i got pinned five or six times the next morning when I was trying to get out of bed, it took all my pride and everything else to pretend like nothing had happened and to get out of bed dressed and to get dressed and get there. And kick Friedman out. Fortunately, his business suit covered up his bruises and scrapes. So basically, among other things,

Paulson was able to bond with the CEO of Goldman Sachs by wrestling him. And that's how he became the CEO of Goldman Sachs by wrestling him and that's how he became the CEO of Goldman Sachs but by losing to the previous CEO yes uh but so uh he was he was like you know recognized as a an important investment banker that people in the Chicago area wanted to do business with so himself and Corzine get appointed he gets appointed COO and Corzine gets appointed CEO and this lasts from 94 to 98 and then there's been a lot written about essentially um uh Paulson kind of intrigued against Corzine though other people will argue that Corzine just like uh was kind of dictatorial and expected loyalty and these kinds of things but Paulson event eventually got him thrown out and

the way that they did this was Corzine wanted to go on a buying merger spree and the board was kind of uncomfortable with this he wanted to like merge with travelers JP Morgan Solomon brothers again this is 94 to 98 this is kind of like a big merger time and we mentioned Goldman was kind of not doing so well in 94 by 95 the economy's kind of recovered and they're doing fine again but what eventually happens is that Corzine wants to merge with New York Mellon and one of Corzine's deputies tips off Paulson to the fact that Corzine is talking to New York Mellon without telling the board of directors so Hank Paulson confronts Corzine at a board of directors meeting with this information that he's like

doing these merger negotiations without first informing the board. Corzine runs out of the room back to his office. And from this point, Hank Paulson is kind of firmly established as the number one. And then he later makes a power play, I think later that year,

where he essentially says, who's he wrestle next uh hank paulson essentially tells the board like i'm gonna leave if you don't make me ceo and so they kick out corzine and hank paulson becomes the sole ce of Goldman Sachs. And it is interesting where Hank Paulson, again, has this reputation as a literal Boy Scout, but Goldman Sachs

becomes a criminal enterprise while Hank Paulson is the CEO. I don't know any other way to say it. Like, whatever you think about finance capitalism in the United States from the 40s to Reagan's deregulation in the 90s and then in the 80s and then Clinton's deregulation in the 1990s. It was less scandal ridden than other areas of American capitalism. What a lot of people now call crony capitalism, what some people call it anyway,

originated with Paulson and other investment banks, their CEOs turning towards fraud as their business model for a number of years. That's their bread and butter. I just want to go through briefly. This is from corpresearch.org.

I'll put it on the Tumblr. But basically, here's just a short list of all of the different criminal actions Goldman Sachs was involved in while Hank Paulson was CEO. These are also the activities that you have to complete to get the finance merit badge. In 2002, it was fined $1.65 million by FINRA for failing to preserve email communications. Another interesting thing about Hank Paulson, and this becomes very relevant during his time as Treasury Secretary, he doesn't use email. Really? Again, you know, it's like he just talks on the phone, which it's like you can either chalk that up to kind of like old guy, luddite shit. Or you can be like, oh, if I don't have any emails, none of my shit can be subpoenaed. And it's impossible for investigators to put forward an actual record of what I

was doing and saying, because all of my conversations are on the phone. Unless you're wiretapping me. Um, whenever I hear about something like business executive or like George W. Bush, not using email, I just picture them sitting at their like empty desk waiting for someone to

come in so they can do something just like staring at the wall he just gets like a pain in his stomach it's like i think people are mad at me on twitter again but i have no idea what a life um okay but so yeah it was fined for failing to preserve email communications in 2003. It paid $110 million for part of a settlement with 10 other firms for conflicts of interest between their research and investment banking activities. We've kind of talked about this, but there was a big scandal with the dot-com boom where their analysts at Goldman and all the other banks were essentially just telling, they were going on television telling people to buy things. They were issuing buy ratings for a lot of tech companies that in their own email records they were calling dog shit and saying that it had no business.

And they were entirely doing this because their firm either had business with these firms or was IPOing them or whatever other reason. So again, just straight up fraud and the kind of thing that could have been avoided if we hadn't repealed Glass-Steagall. Sell me this pen. In 2003, it had to pay $9.3 million in fines in connection with allegations that it failed to properly oversee a former employee who had been charged with insider trading and perjury. In 2004, Goldman was one of four firms fined $5 million each by FINRA for

rule violations related to trading and high-yield corporate bonds. In 2005, the SEC announced that Goldman would pay a civil penalty of $40 million to resolve allegations that it violated rules relating to the allocation of stock to institutional customers and IPOs, that it was kind of like fucking over institutional customers as far as like their shares of stock and these ipos that were again highly lucrative in the 90s and early 2000s um it uh paid another fine to finra in 2005 for violating rules related to the sale of restricted securities during ipos um uh also fined by FINRA same year for late or inaccurate reporting

of municipal securities transactions. And it was also one of 15 companies that were fined a total of $13 million from SEC charges that they violated rules relating to auction rate securities. I just love thinking about him going home and his wife being like, hey, hon hey how's work

he's like i've got more fines by finra another snake day you want to go to petco you're gonna pet some snakes right now yes but uh so interesting uh note if you watch the netflix documentary on hank paulson you will learn none of this really brief on his time as ce of Goldman Sachs. And then, of course, by 2005 at the latest, Goldman Sachs is already shorting the housing market in various capacities, buying what are called credit default swaps entirely from AIG financial products in order to bet against these mortgage-backed securities

that they are also hawking. And, of course, they were in 2006. While also being very busy not seeing the financial crisis coming uh just according to like forbes uh wrote an article in 2007 uh just looking at like one package uh that goldman sachs was selling in 2006 and just quoting from them they packaged about 8 000 california second mortgage loans second mortgagesages are very risky. And then, again, from Forbes, the average equity that the second mortgage borrowers

had in their home was 0.71%. That is not a misprint. The average loan-to-value ratio of the issues borrowers was 99.29%. Wow. So these are basically almost impossible-to-repay loans.

And they are also second mortgages, so anybody who buys this instrument is second in line to receive payment in the event of foreclosure or whatever else. And of course, there was no documentation. These were entirely fraudulent instruments where 99% of the value, no income loans, no money down loans.

And this is what goldman was hawking uh in their um triple a rated mortgage-backed securities while hank paulson was ceo hey david harvey what would you say about this this is absolutely fucking stupid um oh and then one other thing uh around 2003 or sorry around 2000 hank paulson leads the charge to uh ease capital reserve requirements uh with the sec uh at the time um in 2000 firms could be leveraged about 15 to 1 uh in 2004 the sec increases it to 30 to 40 times to one. So again, no responsibility whatsoever for the financial crisis under Hank Paulson. So lax, you know, people often leave the mortgage aspects

at the feet of consumers getting crazy with their finances. Even Hank Paulson does. Like there's a lot of blame on both sides. But really it was about like criminal activity and lax regulation and risky products. Right. And then that's, well, we'll kind of get into this because he becomes Treasury Secretary in July 2006. Again, he takes a huge windfall when he gets to sell his Goldman stock and avoid all this taxes on it. But it's kind of been argued by various people that the way he behaved in the

financial crisis might've also had the beneficial effect of him for him of covering up criminal activity. He might've engaged in while he was at Goldman Sachs because, you know, like his decision when they took over AIG to put a former Goldman Sachs board member in, in as CEO of AIG to make Goldman Sachs completely whole on all their bets

and these kinds of things, bailouts with taxpayer money to try and, it's argued, avoid some sort of lawsuit by shareholders against Goldman or AIG or these kinds of things, which some of them did occur. But the idea is essentially he was trying to cover his tracks, which maybe, maybe not. But so I guess we can just kind of go through what he does as Treasury Secretary, because he starts in July 2006. And in August 2007, the financial crisis kind of begins when BNP Paribas is a French bank. It froze withdrawals from their funds exposed to subprime.

This leads to some minor runs and stuff. And then Christine Lagarde, who I think was at the IMF at this time, or she might have been involved in the French finance, she recalls in various interviews that in February 2008, she tells Hank Paulson that like a tsunami is coming towards you and you were just kind of debating what bathing suit to wear. I remember very well one, I think it was a G7 meeting of February 2008 and I remember discussing the issue with with Hank Paulson and I clearly remember telling Hank we are watching this tsunami coming,

and you just proposing that we ask which swimming costume we're going to put on. What was his response? What was his feeling? Things are pretty much under control. Yes, we are looking at this situation carefully, and yeah, it's under control now he was like in his defense and Hank Paulson's defense she was clearly talking about a honk Paulson mistaken identity yes well my front honk was standing right next to me so how was I supposed to know she meant me but yeah so it's like he was warned at least as early as february 2008 and then uh either through incompetence or um again there's allegations of corruption that maybe he acted either through ideology or loyalty to goldman or desire to cover up possible criminal activity he

might have engaged in as ceo of goldman he really didn't start doing anything until august 2008 so that's like a year but let's talk about this though what's worse him being malicious and planning it out and saying fuck the world i want to get rich or him just being such a dullard and not literally paying attention to people warning him um i mean i guess like if he had malicious intent, it's worse, but they're both terrible, and they're both... Someone's Kantian. They're both illustrative of the idea

that putting Goldman Sachs CEOs in charge of the financial policy of the United States is not a good idea, because they will act in ways that benefit the same financial institutions that in this case destroyed trillions of dollars worth of wealth and foreclosed on nine million people it's like at best it's criminal negligence yes it's like if you keep a raccoon in the house you shouldn't be surprised when it raids your cheerios that you left on the counter but sometimes

andy you have a snake day and all you got is a raccoon. But just to kind of go through the timeline of the financial crisis here, in March 2008, J.P. Morgan gets a federal backstop. The Federal Reserve guarantees $30 billion in Bear Stearns debt and liabilities, and in exchange, J.P. Morgan buys them for eventually $10 a share, originally $2 a share. And this is kind of like, this stabilizes things for a bit. But again, Hank Paulson, even in interviews now, always says nationalization would make the problem worse. But I think the way things have played out, it is very clear that that is not the case because we've had all these foreclosures we have still you know horrific income inequality still you know

low wages etc etc and there's uh and again like eight billion dollars some bonuses were paid to all these people in 2008 in the financial industry and all of these things could have been avoided with nationalization and voting shares and actual ability to direct what these banks were doing as opposed to what actually happened, which is they got their money and then they said, fuck you. We don't need to listen to you anymore. You have no more leverage over us. They became emboldened. Right. And too big to fail.

And the whole moral hazard thing. Exactly. But the runway has been frosted. We have foamed the frost and frosted the foam on the runway. Yeah. But yeah, and like that's the other thing is like Hank Paulson would at the time and later cite moral hazard, though now he says he didn't have the legal authority to save Lehman, but at the time he cites moral hazard. And like, you know, what doesn't have moral hazard is nationalizing the banks and wiping out the shareholders.

That's my favorite punk band, by the way. Moral hazard. So in June 2008, Hank Paulson has a secret meeting in Moscow with the Goldman Sachs Board of Directors, which is just insane. On the face of it, without getting into what they do. Yeah. They talk for at least an hour but uh he of course leaves this off his official uh schedule though andrew ross sorkin does find out about it uh everybody he quotes like plays it down like oh we just thought

the public would get you know mad about this but there was nothing bad going on when uh he met with the former board of the company that he was running and informed them things that he would do as treasury secretary that they could later trade on. But and then again, we'll kind of get back into this, but there's allegations that maybe they discussed AIG at this meeting, maybe not. Hank Paulson, for his part, says he didn't realize AIG had any problem until September 2008. Now, are they meeting again?

Moscow. I give it three years and Kanye samples this. I'm telling you, it's going to happen. Oh, man. I mean, that'll be his comeback. All right, wait a minute, wait a minute. Keep going. So, the other thing that happens is in july 2008 uh this is from business

insider uh paulson met with several hedge fund managers and told them that a government takeover of fannie mae and freddie mac was a very real possibility just a week prior to that meeting he had testified in the senate and told media outlets that government intervention in fannie and freddie was near impossible he would of course uh bail out fannie and freddie in september 2008 so july he's meeting uh with these hedge fund managers uh and also it was hosted by a hedge fund manager who was a former goldman sachs employee this meeting so it's like there's at least these two incidents where he's like very clearly talking to people in the financial world about what he is going to do before he does it

and conceivably they trade on it though you can't really show that and like one person at the fannie and freddie meeting says he like called a lawyer who said don't touch fannie and freddie because this could be evidence of insider trading but uh there's really no way of knowing what people did with this information. Fanny and Freddy sounds like a sex move. Like, it's very like, hey, let's not talk about Fanny and Freddy tonight. Like a British porno or something. Yes, yes.

Freddy and the Fanny. That sounds like a British porn parody of a British sitcom. But so, it's kind of interesting where essentially Fanny and Freddy was filmed in front of a live studio audience. They play that during the porn as well. Sorry.

Go ahead. Well, so the weekend of September 15th is when Lehman runs out of cash, Lehman Brothers, and they get all of the Wall Street bankers together in the Federal Reserve of New York, the heads of the various firms, and they're like, find a private solution to this. We're not giving you any money. And they try, and then they think they can get Barclays to buy Lehman Brothers, but of course Hank Paulson hadn't looped in the British regulator, so the British regulator vetoes it.

And then, as we've mentioned, their conversations at the time were like, oh, this is moral hazard, this is a message to the market, we're going to let it fail, but then later, Paulson and others would say, oh, we just didn't have the legal authority, which, again, a lot of different people, such as Professor Lawrence Ball, have said is bullshit, and they could have done something, they just made a decision not to, and then this is kind of retroactive history. But regardless, what happens when Lehman fails is because of uh english bankruptcy law all of lehman's assets in london are frozen so lehman has like billions of dollars worth of trades and all of a sudden people find that on monday september 15th that they can't get their money out of lehman all these different

financials so they take you know billions of dollars worth of hits all at once, the stock market plunges five or 600 points. And it's just a mess. And then later that week, they have to essentially nationalize AIG. The federal government buys $85 billion in AIG, the government has veto power over decisions from management. They get an 80% stake. And it's kind of interesting where one of the first things where Hank Paulson installs a former Goldman Sachs board member who would have been completely aware of AIG's financial transactions with Goldman Sachs, where Goldman Sachs is buying all these credit default swaps from AIG. Goldman Sachs installs a, or Hank Paulson installs a Goldman Sachs board member as CEO of AIG, even though the former CEO really wasn't involved in all of these decisions that caused the blow up.

He only joined in April 2006, I believe. But regardless, Hank Paulson fires the CEO and puts a Goldman Sachs person in. And one of the first decisions he makes is essentially to pay all of AIG's counterparties with this $85 billion taxpayer bailout or public money bailout. All of AIG's counterparties are paid at 100%. No haircuts, no discounts, no nothing. Goldman Sachs gets at least $13 billion in public money from this. So it's like, this is kind of like, I guess you can call it the conspiracy theory or at least the suspicion, but if Hank Paulson was not incompetent

and was actually directing things in a way, I mean, this is pretty clear evidence that he's putting Goldman Sachs people in charge of AIG and they are using public money to make themselves whole, at least $13 billion. Yeah, so he attached as few strings as possible to the 85 billion. Yes. Right, and it was a guy, Edward Liddy

again, former Goldman Sachs board member who becomes CEO of AIG. Not his first Liddy. They have professional relations. They also in October, they so he gets the TARP Which is essentially the troubled asset relief program

Is a 700 billion dollar blank check From Congress Hank Paulson gets this to put the money in And at this point he's really the most powerful person in America Where he has 700 billion dollars To do what he wants with And what he does is he puts about 250 billion dollars Into buying non-voting shares

Into the major financials you know city group jp morgan uh goldman sachs etc uh this is in october 2008 and again it's just interesting where essentially he just gives them the money with no restrictions like we can talk about uh certainly obama and tim geithner deserve a lot of blame for this, but for the crisis and what happened after. But Hank Paulson was really the guy who had $700 billion in anything to do with it. And at every part of the process, he rejected nationalization and he rejected even just saying to these people, you cannot pay $18 billion in bonuses, which is what they paid, $18 billion in 2008 bonuses when they crashed the entire economy he didn't say

you can't pay bonuses he didn't say we have voting shares he didn't say anything he just said here's the money lend it out which they didn't you know so he could have put those regulations in he could have been like you have to do these things in yeah uh you know one of the biggest proponents of what what passed for nationalization you know kashkari he like even his idea of the nationalization was like uh you know a larger they take a larger ownership share but they still don't really have much control over the operations of the company that they're taking a share in right so like the it's mostly non-voter non-voting shares um they don't get to veto like leadership decisions stuff like that um and what a fucking snake right and it's like again maybe it's incompetence maybe it's ideology

maybe it's corruption but um maybe it's maybelline but regardless he definitely behaved in a way that was extremely beneficial to the financial sector and ultimately preserved it in a much more consolidated but still similar version to the way it existed at the time it created the crisis um and then just kind of going on for the end of his tenure in november 2008 city group uh is still fucked up even after it's got this bailout money it has to do more layoffs its share price drops to four dollars so h Hank Paulson puts another $20 billion in. They put $25 billion in earlier. And the government guarantees $306 billion in possible losses for Citigroup. And even at this time, Ben Bernanke himself suggests that they buy common stock so that the government would have voting shares in Citigroup.

But Hank Paulson, because he is the TARP authority, he vetoes this. And he says, no, we're buying more non-voting shares. And the government at this point ends up owning more than half of Citigroup, but they have no voting shares. So it's essentially you do nationalization with none of the control. Well, they did have some provisions for control over the company's behavior. In fact, enough to where the point where Obama was considering and briefly ordered for a city to be broken up. Right. He passed a memo to Tim Geithner, who there's

a New York Times article that basically goes over he essentially slow walked the order long enough to where it got lost in the system. Tim Geithner would of course go on to scam poor people but unfortunately he's only worth several million dollars. And Tim Geithner would, of course, go on to scam poor people. But unfortunately, he's only worth several million dollars.

There's also this great clip from when he was Treasury Secretary getting grilled by Bernie Sanders about Social Security, which is forecast basically to go bankrupt in, what is is it like 30 or 40 years and that can be very easily averted by just raising the cap on uh incomes that can be taxed because it's capped at something like 100 000 um and so basically all wealthy people pay as much as you know an upper middle class person and so sanders just kind of grills him about this for a second. Should we lift the cap and solve the Social Security problem by asking the wealthy to contribute more into the system? That wouldn't be my suggestion. Why?

Don't you think it's fair that at a time when the wealthiest people have never had it so good and the gap between the rich and the poor is going wide, that simply lifting that cap can solve the problem. I think there are, you know, I think you and I are not going to solve the discussion. This is the situation right here at a public hearing. Maybe you'll be one of those who comes to the table, and that will be your idea. Okay. Plot twist. Okay. Okay. of the one of those who comes to the table and that will be your idea okay plot twist okay okay i just wanted to round out the uh james adome impressions subjects for the episode

but just just the like pure evasiveness of like stay away from my money socialist um but so and then like another interesting thing is that um uh another guy dan jester was a former deputy cfo of um goldman sachs who uh hank paulson put in charge in summer of 2008 uh well he he was kind of like a contractor for hank paulson in summer 2008 but interestingly enough an aig executive told the new york times that jester was calling many of the shots at aig between mid-september uh and the end of october 2008 and again former deputy cfo at goldman sachs who in fact owned shares in goldman sachs at the time that he was calling the shots at aig to make all of their counterparties including goldman

sachs whole at 100 which of course he's financially benefiting from. So it's like this whole thing is so insane to me. Yes, one of the shots that Dan Jester decided was AIG handed over $18.7 billion in cash to the CDO counterparties

in exchange for zero concessions. Hey, Dennis Leary, what do you think of this? www.whatthefuck.com But so I guess, I mean, that's really the end of the Hank Paulson impact on the story. And he really set the table for what came after, which is Tim Geithner as Treasury Secretary continued Hank Paulson's strategy, which is keep the financial giants propped up, make them more consolidated, and certainly don't nationalize or attempt to severely reform them with the leverage that you

do have after they destroyed the economy. And now 10 years out, here we are still waiting patiently for the next financial crisis. And these institutions are even bigger than they were before. But fortunately, he saved it for us. America is already great uh so i guess just like as we're kind of winding down here um uh we can talk about hank paulson christian scientist uh oh but i also want to play hank paulson's one regret this is from this is all you need to hear from the netflix documentary that is a complete fluff piece on Hank Paulson. When I'm looking back at some of the things that I could have done better, the first one I come to is that I was never able to convince the American people that what we did with TARP was not for these banks. It was for them.

It was to save Main Street. It was to save our economy from having a catastrophe. So the whole reason I'm doing this is not because I wanna look back, but because I have increasingly come to the view that it's important that there be a historical record for those that come after me. So we don't replay this movie all over again. This was immediately before his operation for throat cancer.

In a way, I helped you, didn't I? It was a week before his canceled operation. When I met with the Goldman Sachs board in Moscow, I was doing that for Main Street. When I warned hedge funds that Fannie and Freddie were going to be bailed out months in advance, I was really thinking about the victims of foreclosure. When I used $0 of my $700 billion blank check

to bail out underwater homeowners, I did that for Main Street. Well, just the paternalism of it, the condescending paternalism where it's like, people don't understand that I helped them. It's like, if everyone's really mad at you, it's not because they misunderstand how well things are going.

Like, things are going bad, and you clearly made them worse. I just love that, like, his excuse is, like, my line that always makes a fight with my wife worse. It's like, yeah, I should have just explained what I was doing better. Not that I'm sorry for anything, but clearly you didn't understand my communications with you. But yes, and Hank Paulson

in 2016 would endorse Jeb Bush for president. Hell yeah. For some reason, that investment didn't pan out, but he would later go on to endorse Hillary Clinton. And that investment didn't pan out, but he would later go on to endorse Hillary Clinton. Uh, so,

and that investment, that man knows how to pick winners. Uh, but, oh, I did want to just mention this thing from the biography of Hank Paulson, Christian scientist. Um,

I mean, he is kind of the embodiment of, yeah, those two establishment politicians where it's like completely self-serving, completely out of touch from like, you know, what people need and not really caring. And then when it comes, when the cameras turn on saying, hey, I'm doing this for you. Right.

And you need to recognize that. But so Hank Paulson, Christian scientist, just from the biography, Paulson had his own health problems in 94, although nobody inside Goldman Sachs was aware of them. Some people outside the firm recall hearing him describing them as involving quote cancer. But Paulson says, quote, as a Christian scientist, I don't go to doctors and get diagnosis. I don't believe I was dealing with cancer. I was sure, I sure didn't feel well for a period of time in early 1994 and in summer of 1994 i remember working from home and doing a lot of praying for a couple of months where i felt no energy at all i didn't feel well until the problem was met i have relied on prayer for health care all of my life he believes he has had many such quote physical healings and i like uh just like the millions of non-billionaires in america also paulson relies on prayer for health care so don't say he is not a man of the people um but yes unfortunately he's still kicking he's 70 something and we'll see if we get a people's tribunal to sort out what Hank Paulson was involved in.

But yeah. Is that everything? Do we have any other drops we didn't get to? It's stuff that you covered. Here's, I guess, like most of the stuff was just stuff that you said, but then there's this. Secretary Paulson spoke throughout the fall and all the potential root causes of this, and there are plenty, he called them.

So I'm not sure... You're not being serious about that, are you? What would you have expected? What were you looking for that you didn't see? He was the senior advocate for prohibiting the regulation of credit default swaps and also lifting the leverage limits on the investment banks. So again, what he mentioned, those things, I never heard him mention those things.

Could we turn this off for a second? That was from the documentary Inside Job. That was Hank Paulson's former undersecretary of the Treasury who I believe was portrayed in the HBO movie by Eric from that 70s show. Oh really? Which is why they have the scene where they go, nice job not nationalizing the banks, dumbass.

Topher Grace? Is that Eric? Is that the actor? Yeah. I do like that when he was deciding not to nationalize the banks he went to russia to consult with people where they denationalized all pretty much all the industries in the country and then it just like plunged into fire and chaos and he was like yeah yeah this is this is the system we should shoot for oh and we didn't we didn't get into it but goldman sachs became well people call it a bank because

it's investment bank but that's it wasn't an fdic like depository institution yes and they were able to apply for and become one in like a couple weeks really yeah and then in order to so that they could buy back the shares that um berkshire like the position they took made a five billion dollar investment but it's also interesting about like the decision to make uh to give goldman access to the discount window which it's like the federal reserve gives banks loans at below the prevailing interest rate was essentially free money that goldman was at various points lending back to the federal government by buying treasuries so making a profit for doing nothing you know and it's like again just free

money spigot to prop up goldman which hank paulson was formerly the ceo of as opposed to nationalizing goldman and you know uh we've talked a bit about Sweden, the Swedish model was even talked about at the time in the 1990s, Sweden nationalized the banks during a banking crisis and had a fine recovery. But the Iceland model is the other example, which is in the 2008 financial crisis, Iceland was fucked because before the crisis, one of their, their prime minister had privatized the banks. And then in the crisis, they threw that government out and nationalized the banks again and have had a much more stable recovery.

Yeah, I mean, Iceland was arguably even more fucked in terms of like having, you know, it's an island of 300,000 people. Yeah. And a much larger percentage of its economy is finance, even than the US. And so like all of those banks suddenly went under and they chose not to bail them out and also to let to have the companies be put into

federal receivership and so like the government took a control over those banks and they had a much shorter period of time before they eventually became, you know, got out of the crisis, recovered. That always gets me, like, how small Iceland is. It's like Wichita decided that they needed to privatize all their banks. Or they needed to, like, nationalize all their banks

and turn it around. But I think we can all agree that Hank Paulson is correct. That things could have been a lot worse, because if we'd nationalized the banks, then the government would be making decisions, which is not something that happened in the 2008 financial crisis. As opposed to rich people who have no accountability. Yes, the government. The government, Andy. But yeah, I mean, Hank Paulson is pretty fascinating for a billionaire or maybe not quite a billionaire.

He's going to donate all of his money to conservation when he dies, which will, of course, do nothing to offset the impending death of all human life. He may or may not be a billionaire, but he certainly has billionaire dick energy. That's true. That's really the main thing about the podcast. He's done a billionaire's level of destruction.

But I gotta say, the raccoon stuff, though, really adorable. Really, for a snake, pretty cool. Pretty cool. And with that... I'd say he really got into and made a big mess of America's trash. He met with Mark Zuckerberg and was like, you know, a million foreclosures is not cool anymore.

You know what's cool? Nine million foreclosures. But yes, thoughts and prayers to Hank Paulson. We hope he's not somewhere dry heaving right now listening to this. And we hope that his prayers

will continue to provide him with all of the healing that he did not get on his fucked up pinky. And we hope somebody will find out the truth about what he did in the Nixon White House from 1972 to 1973.

You think that coach could have fixed his pinky and then he was like, no, I don't believe in this. The coach is like, I have a really bad feeling about what you're going to do in 30 years. And with that, this has been Grubstakers. New episode every week My name's Yogi Pollywall I'm Andy Palmer I'm Sean McCarthy Steve Jeffers

Alright thanks for listening Goodnight