The reason Hank Paulson let Lehman Brothers fail, according to a Wall Street insider, is because he hated the CEO, Richard Fuld – the man who got punched in the face while exercising at his company gym. Seems Paulson was not alone in those feelings. Paulson, who rose up the ranks to run Goldman Sachs, is leading the government program to get the American stock market back to its punching weight.
“Thank heavens Paulson’s doing it,” says this leading investment banker, as we chatted at the St Andrew’s Ball, waiting for the next Scottish dance, Strip the Willow, to get going.
“He knows what he’s doing and this is a situation we have never seen before. He's not going to let Goldman Sachs go because it's the centre of capitalism. If that goes, the very essence of capitalism goes too.”
The banker went on to explain that in the USA, if a business person joins government, they get a once-in-a-life-time chance to sell off all of their business interests tax free. For Paulson, this was reportedly about $600M in tax free savings as he made the switch from Wall Street to the government. Apparently this is a great incentive to get top quality brains working for the government.
It does show you that even in melt downs, who you know and who likes you still counts.