November 29, 2008 The Guys From Government Sachs

This summer, when Treasury the crisis?Still others question
Secretary Henry Paulson Jr. whether Goldman alumni leading
sought help navigating the Wall the U.S. bailout have the breadth
Street meltdown, he turned to his and depth of experience needed to
old firm, Goldman Sachs, snagging tackle financial problems of such
a handful of former bankers and complexity — and whether Paulson
other experts in has cast his net widely enough to
corporate restructurings.In ensure that innovative responses
September, after the government are pursued."He's brought on
bailed out the American people who have the same life
International Group, the experiences and ideologies as he
faltering insurance giant, for does," said William Black, an
$85 billion, Paulson helped associate professor of law and
select a director from Goldman's economics at the University of
board to lead AIGAnd earlier this Missouri and counsel to the
month, when Paulson needed Federal Home Loan Bank Board
someone to oversee the during the savings and loan
government's proposed $700 crisis of the 1980s. "These
billion bailout fund, he again people were trained by Paulson,
recruited someone with a Goldman evaluated by Paulson so their
pedigree, giving the post to a mind-set is not just shaped in
35-year-old former investment generalized group think — it's
banker who, before coming to the specific Paulson group think."Not
Treasury Department, had little so fast, say Goldman's
background in supporters. They vehemently
housing finance.Indeed, Goldman's dismiss suggestions that
presence in the department and Paulson's team would elevate
around the U.S. response to the Goldman's interests above those
financial crisis is so ubiquitous of other banks, homeowners and
that other bankers and taxpayers. Such chatter, they
competitors have given the say, is a paranoid theory
star-studded firm a new nickname: peddled, almost always
Government Sachs.The power and anonymously, by less successful
influence that Goldman wields at rivals. Just add black
the nexus of politics and finance helicopters, they joke."There is
is no accident. Long regarded as no conspiracy," said Donald
the savviest and most admired Langevoort, a law professor at
firm among the ranks — now Georgetown University in
decimated — of Wall Street Washington. "Clearly if time were
investment banks, it has a not a problem, you would have a
history and culture of committee of independent people
encouraging its partners to take vetting all of the potential
leadership roles in conflicts, responding to
public service.It is a widely questions whether someone ought
held view within the bank that no to be involved with a particular
matter how much money you pile aspect or project or not because
up, you are not a true Goldman of relationships with a former
star until you make your mark in firm — but those things do take
the political sphere. While time and can't be imposed in an
Goldman sees this as little more emergency situation."Goldman's
than giving back to the financial admirers say the firm's ranks
world, outside executives and should be praised, not
analysts wonder about potential criticized, for taking a
conflicts of interest presented leadership role in
by the firm's unique perch.They the crisis."There are people at
note that decisions that Paulson Goldman Sachs making no money,
and other Goldman alumni make at living at hotels, trying to save
Treasury directly affect the the financial world," said Jes
firm's fortunes. They also Staley, the head of JPMorgan
question why Goldman, which with Chase's asset management
other firms may have helped fuel division. "To indict Goldman
the financial crisis through the Sachs for the people helping out
use of exotic securities, has Washington is wrong."Goldman
such a strong hand in trying to concurs. "We're proud of our
resolve the problem.The very alumni, but frankly, when they
scale of the financial calamity work in the public sector, their
and the historic government presence is more of a negative
response to it have spawned a than a positive for us in terms
host of other questions about of winning business," said Lucas
Goldman's role.Analysts wonder Van Praag, a spokesman for
why Paulson hasn't hired more Goldman. "There is no mileage for
individuals from other banks to them in giving Goldman Sachs the
limit the appearance that the corporate equivalent of
Treasury Department has become a most-favored-nation status."Paulson
de facto Goldman division. Others landed atop Treasury because of a
ask whose interests Paulson and Goldman tie. Joshua Bolten, a
his coterie of former Goldman former Goldman executive and
executives have in mind: those President George W. Bush's chief
overseeing tottering financial of staff, helped recruit him to
services firms, or average the post in 2006.$
homeowners squeezed by