Why Was Paulson's June 2008 Meeting With Goldman's Board Purposefully Kept Secret By The Treasury?

Tyler Durden's picture

According to Andrew Ross Sorkin's new book, which is out today, the Treasury department, and Hank Paulson in particular, have some new disclosure issues to discuss next time there is a hearing on matters of the financial crisis. Sorkin points out that in June 2008, at a time when Goldman's Board of Directors was in Moscow for a meeting with Mikhail Gorbachev, then Treasury Secretary Paulson decided to invite the entire BOD to his hotel suite in a meeting that would be "off the record" as it was considered a social event. Among the events discussed were: economic forecasts, the prospects of banks blowing up (like Lehman), as well as previews of his upcoming speech. How this occurred in an uncalendarized meeting where there was material disclosure, boggles the mind.

From Sorkin (via Felix Salmon):

When Paulson learned that Goldman’s board would be in Moscow at the same time as him, he had [Treasury chief of staff] Jim Wilkinson organize a meeting with them. Nothing formal, purely social — for old times’ sake.

For fuck’s sake! Wilkinson thought. He and Treasury had had enough trouble trying to fend off all the Goldman Sachs conspiracy theories constantly being bandied about in Washington and on Wall Street. A private meeting with its board? In Moscow?

For the nearly two years that Paulson had been Treasury secretary he had not met privately with the board of any company, except for briefly dropping by a cocktail party that Larry Fink’s BlackRock was holding for its directors at the Emirates Palace Hotel in Abu Dhabi in June.

Anxious about the prospect of such a meeting, Wilkinson called to get approval from Treasury’s general counsel. Bob Hoyt, who wasn’t enamored of the “optics” of such a meeting, said that as long as it remained a “social event,” it wouldn’t run afoul of the ethics guidelines.

Still, Wilkinson had told [Goldman chief of staff John] Rogers, “Let’s keep this quiet,” as the two coordinated the details. They agreed that Goldman’s directors would join him in his hotel suite following their dinner with Gorbachev. Paulson would not record the “social event” on his official calendar…

“Come on in,” a buoyant Paulson said as he greeted everyone, shaking hands and giving bear hugs to some.

For the next hour, Paulson regaled his old friends with stories about his time in Treasury and his prognostications about the economy. They questioned him about the possibility of another bank blowing up, like Lehman, and he talked about the need for the government to have the power to wind down troubled firms, offering a preview of his upcoming speech.

A few relevant questions should be addressed: i) how was this meeting considered to be a "social event" if such critical matters as the economy, Dick Fuld's subsequent implosion, and speech drafts were being discussed behind closed doors; ii) what are the guidelines that Wilkinson, or any other Chief of Staff for that matter, use when determining what meeting is considered to be "off the record"; iii) this is merely one example of a "behind closed doors" meeting (it just so happens to have been with Goldman) - how many other times did the Treasury permit such comparable other meetings in the past, and what was discussed on them?

One wonders whether a FOIA request for this information would even garner any relevant information as all the occurrences happened off the US Treasury's record. Yet, in keeping with the administration's professed desire for increased transparency there has to be a way to achieve some disclosure of what Hank Paulson, who is already in hot water with regard to his Bank of America involvement, had been doing, especially if it was unilaterally beneficial to his former employer.

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Cursive's picture

I don't believe they discussed the possibility of another bank blowing up, I believe that the GS cronies, Paulson included, were discussing exactly how LEH would go down.  This has all been planned.  What more proof do we need?  And they met in Russia of all places?  Wall Street is full of gangsters.  These gangsters, a/k/a "banksters", have no allegiance to our country.  How is that not more apparent to more people?

Cursive's picture

BTW, Cuomo, if you are reading this, for the sake of our country, please start the indictments already.

deadhead's picture

BTW, Cuomo, if you are reading this, for the sake of our country, please start the indictments already

I think it likely that Mr. Cuomo/staff are checking in here and I echo your thought. I reiterate my previouosly stated position that the State AGs are doing much more in terms of respecting the rule of law than the SEC. 

Thank you from a NYer who appreciates your efforts Mr. Cuomo and that of your staff.

bonddude's picture

If he gives up the ghost on BofA he appears to be lined up for Gov. but if he pushes on he could be President.

deadhead's picture

I have little doubt that the big house is on his list. 

agrotera's picture

Yes, please!

And while you are at it, --please take a look at all of Goldman's short positions in LEH, and their ownership of CDS's and then take a look at every affiliate of Goldman, all subsidiaries, etc, so that every single fund or partnership that is tied to Goldman is previewed for their ownership of LEH CDS's and shorts...then take a look back and notice that GS was going down at the same pace as LEH (and so was MS).  If you then consider a massive acute win on the LEH short and CDS bet, surely this was the blood needed to get the other brothers down the road to their bank holding status (which LEH wasn't given in a timely manner) and their ultimate BAILOUT.


Cognitive Dissonance's picture

Silly rabbit, tricks are for kids.

They all met for social reasons, which in my book means group sex, with each other, without condoms.

I hope they all infected each other.

Cursive's picture


I read Mish's post WRT GS last night.  Given that Kashkari and this other kid is the COO at the SEC have no business being there, I was struck with the thought that, if either of them were all that, why wouldn't the execs at GS want them inside the company.  Well, truth is, they probably suck and their only usefulness was as a public pawn.  If you are a no-talent POS within Goldman, how do you apply for becoming the public pawn?  Well, you probably start traveling in the darker circles of GS and, after a few milder initiation attempts (e.g. elephant walks), you probably have to submit to ritualistic homosexual sex.  Sort of like the Templars, no?  That's the only thing I could come up with.

ghostfaceinvestah's picture

My thoughts exactly.

"the prospects of banks blowing up (like Lehman)"

More like: "which banks to blow up".

No doubt LEH was a pain, they were actually better than Goldman at some areas of bond underwriting.  With BSC out of the way, killing LEH would be very convenient indeed.

Commander Cody's picture

Government in the sunshine my ass.  Paulson is, and has always been, a Goldman man through and through.  A stooge to the end.  Screw Hank.

koaj's picture

hang them all

dark pools of soros's picture

no - heads on sticks... we need the message to last as long as possible

Anonymous's picture


Careless Whisper's picture

Is anyone still in denial that GoldmanSachs owns the government; lock, stock, and barrel?



Anonymous's picture

THE Banking Cabals are our government now!!

Wake up frogs! You are slowly being boiled to death...

Cognitive Dissonance's picture

Why should I? Isn't there such a thing as self cannibalism?

Who was it that said "I love me some me."  

chet's picture

For those with the same question I had:

The book is called "Too Big to Fail".  I think Sorkin is discussing it on NPR's Fresh Air today.

Anonymous's picture

"Hank Paulson, who is already in hot water with regard to his Bank of America involvement"

Oh please, no he's not in 'hot water'. Does anyone honestly believe Hanky is losing sleep? He's got a PR person on the problem and he's moved on.

Anonymous's picture

I am sure the Russians will know. ZH have to inquire with Kremlin(discretely of course)to see if they have any record through their bugging of the suite(lol)

VegasBD's picture

thats prolly not that for from a realistic possibility...

aint no fortunate son's picture

Gee, and Neel Kashkari had such nice things to say about Paulson, Geithner and Bernanke today on America's premier business fantasy show, CNBC. To hear him talk, they all ought to get lifetime achievement awards for their conduct over the past two years.

Hmmm, I wonder what Kashkari did before he went to Treasury.

Lionhead's picture

He looks like a young Dick Grasso. Very attractive, I understand, to the female CNBC staff. No wonder they had him on today to divert attention away from more pressing matters. May all their heads be severed & put on public display someday.

Bob's picture

Why keep it secret?  To protect us all from getting the "wrong" idea, of course.  Gotta always protect the people--it's a wonder they're able to sleep at night. . . but I guess they do all that worrying for us so that we can.

rhinotrader's picture

Does anyone think that disposable Cell phones are given for "private" talks between the FED and GS are? I am surprised people are only concerned about calls made from the office.

Anonymous's picture

Ain't this how you're supposed to run a banana republic?

It's the Wild west all over again and the sheriff is owned by the Cavndish gang.

George the baby crusher's picture

But the sad thing is, we know. They know we know and we know they know we know. But we'll never get to them.

deadhead's picture

it's turning to a noticeable degree. the Chuck Todd piece this a.m. with D. Ratigan is a perfect example.  HuffPo on a daily basis trashes the wall st, banking, treasury, fed complex.  the wheel is getting squeakier and rahm and david a. know it.


Cognitive Dissonance's picture

Then it's a perfect time to engineer another market crash and distract everyone from the slowly-coming-to-the surface corruption by sinking a few of everyone's boats.

Nothing focuses the mind quite like a sudden drop in your net worth. 

Fed, start removing some of that liquidity you've been pumping non stop for 7 months. Won't take much to stampede the sheeple. They're expecting it anyway.

George the baby crusher's picture

Is there accountability though?

tip e. canoe's picture

"the wheel is getting squeakier and rahm and david a. know it."

new green energy idea for the administration:  install one of those pedal power energy generator thingies under tiny tim's desk and you could power the entire treasury building for the next year as the foot tapping becomes furious under there.

come on timmy, you can do it!  remember, "plan is better than no plan!"

Anonymous's picture

"They questioned him about the possibility of another bank blowing up, like Lehman,..."

Mistake? Did he meen Bear Stearns? How could you otherwise ask that question in June 08?

Anonymous's picture

What the hell was anybody doing in Moscow talking to Gorby?

Anonymous's picture

When exactly did this happen, it doesn't say?

Anonymous's picture

Vive la BANKSTERS. Since the decline of the western Monarchies, they've been in control of everything. Don't kid yourselves. THEY OWN YOU.

Anonymous's picture

If you think Mugabe Jr. is not going to fuck GS over in the end, you don't know much about history. (neither does GS).

Screwball's picture

I agree DH, but not near squeaky enough.  No let up, keep after the fraudsters and crooks until they are hanging by their nuts.

theprofromdover's picture

'A social evening in Moscow'

I'm sure Vladimir P has it all on tape (informally of course).

I'll have a word next time I see him.

waterdog's picture

Given Paulson’s arrogance about how he did everything for the good of the people, one should just simply ask him what was discussed at the meeting. He will tell you everything. He does not care what you think about him or, what you think you can do to him. He is not going to lie to anyone about something he set up. Also, he does not care how some spineless, girlie boys in the administration felt about the meeting or how they handled it with public knowledge. What the heck, does he have to do everything?

Anonymous's picture

The only thing that should "boggle your mind" is the fact that Paulson DOES NOT HAVE HANDCUFFS on!!!

The very individual that lobbied SO HARD for deregulation of the banks and was SO vital in creating this FRAUD of historic proportions is FREEEEEEEEE

Call your Senators and Congressmen daily until he isnt.

Anonymous's picture

Come on all...
Paulson, Hank...

did the best he could, with what he had, at the time he did it, with those he knew could handle it, by telling others who could profit from it, who in turn, would provide payment back, to those who needed it, to keep those who did not get any, away and in the dark- for as long as possible.

Until, someone found out, and wrote in a blog, that started a stink, that.....

sergeyvz's picture

Much more interesting question: why the whole GS Board went to Moscow in the first place ?? They say: to meet with Gorbachev... :))) gimme a break !

This clown who have to advertise Louis Vuitton bags to make his living has no any influence in Russia at all. One guess - they went to discuss joint Paulson/GS raid on commodities and oil prices, but there might be more hidden...

See also here for some interesting thoughts:



Careless Whisper's picture

Russian Oil Pipeline being constructed from Siberia to China. Putin in charge of it. Cost $24 Billion. That's $24 Billion worth of bonds that the Squid will sell.

Mark Beck's picture

Now I am not defending Hank here, but he was after all appointed by Bush. I wonder what questions he asked of Hank before giving him the position? Here are some comments from President Bush;

President Bush’s comments that “one of Mr. Paulson’s objectives would be to ensure the currency flexibility of the US’s trading partners,” such as “to allow a faster appreciation of the [Chinese] renminbi in order to help reduce global economic imbalances.” The article continues that “By mid-session New York trade, the dollar was down 1 per cent at $1.2866 to the euro, 1.3 per cent to $1.8818 against sterling, 1 per cent to SFr1.2119 against the Swiss franc, 0.2 per cent at Y112.23 against the yen, and 0.6 per cent to C$1.0995 against its Canadian counterpart, brushing 28-year lows.”  

To me it was obvious from the start that Hank was not qualified to be Secretary of the Treasury even in the best of times. But, to have Hank in place during the banking crisis was one of our greatest financial misfortunes in the history of the US.

Anonymous's picture

Nothing will come of this. Nothing will come of anything now in the works, whether it is pressing Goldman or Paulson or auditing the Fed or getting the Fed to respond to Bloomberg's FOIA request (is it September 30th yet?). Congress and a few judges and a state AG will talk, a couple of bloggers will get nasty, a TV face or two will let off some steam, but in the end NOTHING will get done.


Patience is not a virtue, it is a weakness. The choice is now do we all shut up, bend over, and take it like the "bitches" we are, or do we shake the tree of liberty and take the country back? I'm guessing we'll just bend over.

Either we literally take the heads of those who deserve to have their heads taken, or we lose. It is not treason to advocate the only thing that can save what was once our country, it is patriotism.

If the Founding Fathers had our degree of courage, we'd be Bermuda.