Too Big to Fail [27]
When Wendy became pregnant with their first child in 1973, Paulson, eager to earn some money, decided to leave the Nixon White House and started looking for work in the financial sector—but not if it meant living in New York. He interviewed with a number of financial firms in Chicago, and of all the offers he received, he was most attracted to two Manhattan firms with major Chicago offices: Salomon Brothers and Goldman Sachs. He decided on Goldman after Robert Rubin, a Goldman partner and future Treasury secretary, Gus Levy, a legend at the firm, and John Whitehead, among others, convinced him that he could be successful there and never have to live in Gotham. His salary: $30,000.
In January 1974, Paulson moved his family back to where he had grown up, Barrington Hills, a town of fewer than four thousand residents northwest of Chicago. Paulson bought five acres of the family farm from his father, who was a wholesale jeweler. There, up a winding road from his parents’ home, he built an unpretentious wood-and-glass house, nestled among tall oak trees at the end of a half-mile driveway.
At Goldman, Paulson was given an unusual amount of responsibility for a junior investment banker. “You know, Hank, we ordinarily don’t hire guys as young as you into this role but, you know, you look old,” Jim Gorter, a senior partner, told him, referring to his rapidly receding hairline. Having quickly proved himself with important Midwestern clients like Sears and Caterpillar, he was soon marked as a rising star at the firm’s Manhattan headquarters. In 1982 he made a partner, placing him in an elite group of men and a few women who were entitled to a bigger share of the bonus pool. When he became co-head of investment banking and a member of the firm’s management committee from Chicago, he was obliged to spend a great deal of time on the phone, which he did somewhat famously, leaving interminable messages at all hours of the day.
Only four years later, in September of 1994, however, Goldman Sachs was in turmoil. An unexpected spike in interest rates around the world had hit the firm hard, sending profits tumbling more than 60 percent during the first half of the year. Stephen Friedman, the firm’s chief executive, suddenly announced he was resigning; thirty-six other Goldman partners soon left, along with their capital and connections.
To stanch the bleeding, the firm’s board turned to Jon Corzine, Goldman’s soft-spoken head of fixed income. The directors saw Paulson as a natural number two who would not only complement Corzine but send a signal that investment banking, Paulson’s specialty, would remain as key an area as ever for Goldman. They were betting that Corzine and Paulson could form a partnership as powerful as that of Friedman and Robert Rubin, and before them, John Whitehead and John Weinberg.
There was only one problem with the plan: Neither man cared much for the other.
At a meeting at Friedman’s apartment on Beekman Place, Paulson expressed resistance to the idea of working under Corzine, or even to relocating to New York, which he had doggedly avoided all these years. Corzine, who was known to be especially persuasive in one-on-one encounters, suggested that he and Paulson take a walk.
“Hank, nothing could please me more than to work closely with you,” Corzine said. “We’ll work closely together. We’ll really be partners.” Within an hour they had reached a deal.
On arriving that year in New York, Paulson moved quickly.