All the Devils Are Here [97]
The rest of Wall Street watched Goldman’s metamorphosis with a mixture of envy, frustration, and resentment. But even as Goldman’s peers questioned and criticized its transformation, they also tried to copy it. The money—both the profits the firm produced and the paychecks its partners got—made Goldman the firm that everyone else had to keep up with. And to the outside world, it looked like they had become like Goldman. They all embraced risk taking and they all began to produce outsized profits. And yet the crisis would show that they weren’t like Goldman at all.
In his memoir, On the Brink, Paulson recalls the moment when he went to talk to Corzine after the coup had been completed. Corzine had just learned his fate; he’d been informed by John Thain, Goldman’s CFO and Corzine’s close friend. (In 2007, Thain was named chief executive of Merrill Lynch; during the worst weekend of the financial crisis, he negotiated its merger with Bank of America.) “Hank, I underestimated you,” said Corzine, according to Paulson. “I didn’t know you were such a tough guy.”
In fact, there was a lot about Hank Paulson that was surprising. He was a devout Christian Scientist, whose worst vice was too many Diet Cokes. Despite a nine-figure net worth, he inveighed against conspicuous consumption. He was almost absurdly frugal, a trait he inherited from his father, an Illinois jeweler. He and his wife, Wendy, whom he married during his second year at Harvard Business School, were avid conservationists and fanatical bird-watchers. Though they obviously lived in New York, the Paulsons’ homestead was in the Midwestern prairie, on a farm in Barrington, Illinois. It was where Paulson had grown up.
As a leader, Paulson was cut from a very different cloth than, say, Bob Rubin. He once told his alumni magazine that “I’m not an inspirational leader. I’m just not.” He didn’t lead by charm, or by leading people to his way of thinking by asking, “What do you think?” Rather, he was a force of nature, and his management style was marked by a kind of brutal pragmatism. His preferred mode was revving into action rather than sitting back, waiting, and patiently strategizing. He was direct to a fault, utterly lacking the verbal slickness that dissembling requires. At about six foot two with a build that still mildly resembled the Dartmouth football player he’d once been, and a gravelly voice to boot, Paulson had an aggressiveness about him that made people think he was much bigger than he was, and which could intimidate people into silence. These qualities also led some people to underestimate Paulson, as Corzine had. But doing so was a mistake: he had a mind that was surprisingly detail-oriented, nuanced—and clever.
He also had an astonishing work ethic. “Hank is a heat-seeking missile,” says a former Goldman partner. “If you say Motorola might do a financing, he calls Motorola seven thousand times. He doesn’t stop.” (Paulson would always tell the firm’s bankers that they had to have something new to offer with each and every call.) He hated—hated—losing, whether he was on the ski slopes or trying to land a deal.
Unlike his predecessor, Corzine, or his eventual successor, Lloyd Blankfein, Paulson was an investment banker, not a fixed-income trader; he had spent the early part of his career doing banking deals out of Goldman’s Chicago office. (Prior to joining Goldman, Paulson had served as an assistant to John Ehrlichman in the Nixon administration.) He became a partner in 1982, eight years after joining the firm, rising to be co-head of the firm’s investment banking department and then its chief operating officer before taking over as CEO in 1999.
Investment banker though he was, Paulson did