I was able to access Former Treasury Secretary Hank Paulson’s phone records while holding office. My colleague John Crudele gave me access to the data and has written extensively on Paulson’s actions during the Lehman collapse.
It seems the secretary is very chatty with “market participants” during the Lehman Bros. turmoil and ultimate collapse. “Market participants” as defined by Paulson involved Lloyd Blankfein of Goldman, John Mack of Morgan and Jamie Dimon of JPMorgan.
If you recall last September, Washington was calling the shots during the market meltdown so it would stand to reason that Paulson was quarterbacking the financial team, yet he appears to be tipping off the defense (Wall Street) before the snap.
Google “John Crudele” to read his columns with all the details.
I scrutinized the events around the demise of Bear Stearns the previous March. To recap on March 7th 2008, Bear was suffering a liquidity drain. The Street was calling in all chits and not issuing new ones. Trading partners were pulling out of deals and the Bear trading desk was imploding.
Paulson is on the left coast in Palo Alto, CA. Paulson’s first call on that morning at 4:40am (I assume local time) is to Bob Steel former Goldman Vice Chairman with Paulson and soon to be heading up Wachovia. Steel like Paulson and Bob Rubin before them doing their time in DC to feed information back to the mothership. He then calls Tim Geithner at the NY Fed, then JPMorgan’s Jamie Dimon and Lehman’s Dick Fuld.
I can’t be sure if the decision for Dimon’s JPMorgan to backstop Bear’s trades was made as yet, but he spoke with Steel two more times that day to see how the Bear backstop was going.
It seems curious to me for the Treasury Secretary to be contacting competitors to Bear Stearns when the firm is floundering, unless Hank was running an M&A desk out of Treasury.
More on the Bear Take down in the next post.
For more on Wall and Washington and the economy see: https://mgray12.wordpress.com