All the Devils Are Here [153]
In some ways, Paulson was an odd choice for Bush. As an ardent environmentalist, Paulson believed that climate change was real, a view not embraced by the White House. More important, he was neither a partisan Republican nor a free-market ideologue. He would later cite the pressure on him to get rid of Sarbanes-Oxley, the law passed in the wake of the Enron scandal, which Republicans in Congress hated. Paulson refused. “I don’t find a single provision bad,” he said.
He also worried about the widening gap between rich and poor—also not a subject often discussed in the Bush White House. In a speech at Columbia on August 1, 2006, he said that “amid this country’s strong economic expansion, many Americans simply aren’t feeling the benefits.” The comments sent Republicans into a tizzy.
Like all captains of industry who join the Treasury, Paulson was in for a bit of a shock after his nomination was approved by the Senate in July 2006. He hadn’t understood how outdated Treasury’s systems were—there was no real-time access to market information, and the voice mail system was antiquated. (Voice mail has long been Paulson’s primary method of communication.) As he recounts in his book, he was shocked to discover that “an extraordinary civil servant named Fred Adams had been calculating the interest rates on trillions of dollars in Treasury debt by hand nearly every day for thirty years, including holidays.” Nor had Paulson fully appreciated how limited Treasury’s tools were: Treasury was not a bank regulator. It had moral suasion, but no supervisory levers, and it couldn’t spend money unless it had been appropriated. “At Goldman, he had the responsibility, but also unbridled command over thousands,” says one Treasury employee. “Here, he had the responsibility times a thousand, but no ability to command.”
The new Treasury secretary gave longtime department aides a bit of a shock as well. “People were taken aback by Hank’s aggressiveness,” says one staffer. “He’s a force of nature. He gets people to do stuff they’d never do.” They weren’t used to a boss as relentless or as blunt as he was. Paulson also made decisions by talking, and frequently repeating himself. “If you’re in a meeting with experts, you usually let the experts talk,” says one staffer. “But when it’s Hank, then the first ten minutes are Hank talking!” Like many, this staffer grew to respect and admire Paulson. But for people who didn’t know him well, it was his “let’s get this done yesterday” demeanor that stuck in their minds. Staffers quickly spread stories of Paulson’s impatience and his odd mannerisms. “He’d just appear in people’s offices and start talking while you had your back to him typing,” marveled one person, who also remarked that Paulson gave Treasury an energy and sense of purpose that it had lacked. Later, during the crisis, Paulson would come in, eat oatmeal, and then, by seven a.m., start making the rounds. His longtime assistant, Christal West, would send out a heads-up: “Be prepared! He’s roaming!”
Like everyone both on Wall Street and in Washington, Paulson didn’t see—and wouldn’t see for a long time—just how bad things were and where they were headed. He would later argue that even if he had seen it coming, he still couldn’t have done anything, given the inadequate tools at his disposal and the difficulty he faced in getting Congress to take action even after the situation had become dire. “If I had been omniscient, there’s not a single additional thing I could have done that would have made a difference,” he’d later say.
What is surprising, in retrospect, is that Paulson did try to do something. He is anxious by nature, and you could