By John M. Mason
Henry Paulson lived this book On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (Business Plus/ 2010) and he also wrote the book. There is no indication, anywhere, that he had any help in producing the manuscript. Right up front he states, “To write this book, I….” He tells us, that “I have been blessed with a good memory, so I have almost never needed to take notes.” He claims, “I’m a candid person by nature and I’ve attempted to give the unbridled truth. I call it the way I see it.”
I put so much emphasis on the fact that he wrote the book without any help because this is not what usually happens when someone as important as a Secretary of the Treasury produces his memoirs. 
Robert Rubin didn’t. As a consequence the book is very personal: a co-author would not have kept in the sections where Paulson had to excuse himself from meetings to take care of his “dry heaves”; a co-author would not have kept in the information that Paulson joined a conference call “still wearing the boxer shorts and T-shirt I slept in…”
It is also very personal when he is discussing what took place leading up to the government taking over Fannie Mae and Freddie Mac and removing their CEOs. It is also very personal when he discusses the bailout of Bear Stearns and the efforts to find a buyer for Lehman Brothers. It is also very personal when he describes the debates, negotiations, and conflicts that took place with the leaders of Congress as he attempts to mold legislation relating to the Troubled Asset Relief Program (TARP).
It is also interesting to hear Paulson write about how he worked with Tim Geithner, then President of the Federal Reserve Bank of New York, and Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System. For better or worse, these three men formed a team that was almost in constant contact with one another throughout an extended period of time beginning in August 2007 and extending until Paulson left office in January 2009. It seems as if these three people made most of the decisions during this time. And, at least from Paulson’s side of the table, the partnership of these three men prevented another Great Depression.
Hank Paulson was George W. Bush’s third Secretary of the Treasury. His name was given to Bush by Jim Baker, former Secretary of the Treasury and Secretary of State and a good friend of the Bush family. Bush’s first two choices were not finance people and did not have significant ties to Wall Street. The reason for staying away from Wall Street people: Paulson writes “he (Bush) had a genuine contempt for Wall Street and its minions….”
Apparently Baker believed that Bush ultimately needed someone with Wall Street savvy because he (Bush) was just not getting very good financial and economic advice. Paulson’s first response was to turn down the offer. The response of his family and his mother was to turn down the offer. Likewise with many of his friends.
Why then did he take the position? Well, when the President calls you just don’t say no!
In taking the position he secured the promise of the President that he (Paulson) would become the primary spokesman on economic and financial affairs for the administration. Then, he said, he set out to “restore credibility to Treasury.” Obviously, he thought very little of what the Treasury Department had become in the first five years of the Bush (43) administration and under the leadership of the first two Bush Secretaries of the Treasury.
Paulson contends that very early on in his tenure he began to prepare for the possibility of a financial collapse. Just after joining the administration, at a meeting of the Bush (43) economic team at Camp David, he presented some ideas about crisis prevention. “I explained that we needed to be prepared to deal with everything from terror attacks and natural disasters to oil price shocks, the collapse of a major bank, or a sharp drop in the value of the dollar.” He continues, “If you look at recent history, there is a disturbance in the capital markets every four to eight years.” He then listed the disturbances that had occurred in the past fifteen years or so, beginning with the savings and loan crisis in the late ‘80s and early ‘90s.
Still, the administration was not prepared. “The crisis in the financial markets that I had anticipated arrived in force on August 9, 2007. It came from an area we hadn’t expected—housing—and the damage it caused was much deeper and much longer lasting than any of us could have imagined.”
Paulson then delves into the crisis, in many cases on a day-by-day basis. It is a very personal book with a very personal take on the individuals that were involved in the crisis. It even gets into the personalities of the 2008 election, but I won’t go into that here.
Much of the story is known and has been told by other authors. The difference to me is that Paulson is able to convey to the reader some of the tension and the time pressure that was faced by everyone dealing with the crisis. The only analogy that I can think of to describe this is professional football. Everyone that plays professional football is fast, not only going forward, but backwards and side-to-side. The speed and intensity at which the game is played is incredible.
The same can be said of the financial crisis: things happened and they happened fast. There was no let up. People didn’t get enough sleep and they were tired and edgy. Tempers flared and people shouted at one another. Paulson captures some of the speed and intensity of this period. To experience this, even from the outside, is a valuable aid for the reader toward understanding what happened.
There are two points that I would like to close this review on. The first has to do with people doing something that they don’t believe in. Paulson confesses: “I am a firm believer in free markets, and I certainly hadn’t come to Washington planning to do anything to inject the government into the private sector.” But he did inject the government into the private sector.
In this book, Hank Paulson gives us a chance to listen to the “inside story” and see what it was like going through the financial meltdown of 2008 and doing things that were not always tasteful. The justification: if these things were not done the whole world would come crashing down, markets and all. It was the justification then. Hearing Geithner’s AIG testimony before Congress last week indicates that it is still the justification today.
My experience with something like this was my participation in meetings of the Cost of Living Council and the Committee on Interest and Dividends in August 1971, running on into 1972. Sitting there in the White House at the Cost of Living Council meetings it was apparent that there was only one believer in the room: John Connally, the Secretary of the Treasury. Substantially less enthused participants in the room were George Schultz, Arthur Burns, my boss George Romney, and others. They got the work done, but there was very little energy in the room as far as I could tell. And, one really didn’t know what they were thinking except maybe, “Boy, I wish this were over.” Many in the Bush (43) administration had this look on their faces as 2008 was coming to an end.
The other point has to do with Bush (43), himself. The amazing thing in the story Paulson tells is the absence of the “Decider.” He is almost non-existent, someone Paulson called to brief and to get his OK on what had been done. But, for the most part, Bush is not anywhere in sight. Regardless of how you feel about Paulson, the scary thing to me is that the Secretary of the Treasury during this time of crisis could have been someone named O’Neill or Snow. Then where would the leadership have come from?
This book is packed full of information and yet it reads well and I could not put it down. It gives us some insight into what went on by someone who was a major player in all the action.
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 holding several positions including, Managing Partner of the firm's Chicago office, Co-head of the firm's investment Banking Division, President and Chief Operating Officer, and Co-Senior partner.
Prior to joining Goldman Sachs, Paulson was a member of the White House Domestic Council, serving as Staff Assistant to the President from 1972 to 1973, and as Staff Assistant to the Assistant Secretary of Defense at the Pentagon from 1970 to 1972.
John M. Mason writes on current monetary and financial events. He is a professor at Penn State University and has taught in both the Management Division and the Engineering Division. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania. Dr. Mason has been President and CEO of two publicly traded financial institutions and the Executive Vice President and CFO of a third. He has also served as a Special Assistant to the Secretary of the Department of Housing and Urban Development in Washington, D. C. and as a Senior Economist within the Federal Reserve System. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.
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Feb 8, 2010 
at the very least. Not only does Dr. Bell discuss attitudes, she gives tips on what to wear at work. One tip: ditch the severe black "corporate" look and go for bright colors. You don't have to look like a guy, she says, as long as you don't overdo it with revealing garb better suited to a party.
