Henry Paulson

 ( 1946 Births ) 

Paulson has personally built close relations with China during his career. In July 2008, The Daily Telegraph reported "Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country more than 70 times."

Before becoming Treasury Secretary, he was required to liquidate all of his stock holdings in Goldman Sachs, valued at over $600 million in 2006, in order to comply with conflict-of-interest regulations. Due to a tax provision passed under President George H. W. Bush, Paulson was able to defer his capital gains tax, saving himself an estimated $50 million.

Paulson identified the wide gap between the richest and poorest Americans as an issue on his list of the country's four major long-term economic issues to be addressed, highlighting the issue in one of his first public appearances as Secretary of Treasury. "New Treasury head eyes rising inequality", The Christian Science Monitor, August 3, 2006, Retrieved August 3, 2006.

Paulson conceded that chances were slim for agreeing on a method to reform Social Security financing, but said he would keep trying to find bipartisan support for it.

He also helped to create the Hope Now Alliance to help struggling homeowners during the subprime mortgage crisis.

Paulson was known to have persuaded President George W. Bush to allow him to spearhead U.S.-China relations and initiated and led the U.S.-China Strategic Economic Dialogue, a forum and mechanism under which the two countries addressed global areas of immediate and long-term strategic and economic interest. In spring 2007, Paulson warned an audience at the Shanghai Futures Exchange that China needed to free up capital markets to avoid losing potential economic growth, saying: "An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention." In September 2008, in light of the economic crisis experienced by the U.S. in the interim, Chinese leaders evidenced hesitation to follow Paulson's advice. When the U.S. needed to issue a huge volume of bonds to stabilize the financial market, it relied on China, the top holder of US debt.

In August 2007, Secretary Paulson explained that U.S. subprime mortgage fallout remained largely contained due to the strongest global economy in decades.

On March 26, 2008, Secretary Paulson said in remarks at the U.S. Chamber of Commerce,

As we work our way through this turbulence, our highest priority is limiting its impact on the real economy. We must maintain stable, orderly and liquid financial markets and our banks must continue to play their vital role of supporting the economy by making credit available to consumers and businesses. And we must of course focus on housing, which precipitated the turmoil in the capital markets, and is today the biggest downside risk to our economy. We must work to limit the impact of the housing downturn on the real economy without impeding the completion of the necessary housing correction. I will address each of these in turn. Regulators and policy makers are vigilant; we are not taking anything for granted.

In May 2008, The Wall Street Journal wrote that Paulson said U.S. financial markets are emerging from the credit crunch that many economists believe has pushed the country to the brink of recession. "I do believe that the worst is likely to be behind us," Paulson told the newspaper in an interview. Retrieved May 7, 2011

On July 20, 2008, after the failure of Indymac Bank, Paulson reassured the public by saying, "it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."

On August 10, 2008, Secretary Paulson told NBC's Meet the Press that he had no plans to inject any capital into Fannie Mae or Freddie Mac. On September 7, 2008, both Fannie Mae and Freddie Mac went into conservatorship.

On November 18, in testimony before the United States House Committee on Financial Services, Secretary Paulson told lawmakers,

There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis always keeping focused on Congress's goal and our goal – to stabilize the financial system that is integral to the everyday lives of all Americans.

On November 20, 2008, during remarks at the Ronald Reagan Presidential Library, Secretary Paulson said,

We are working through a severe financial crisis caused by many factors, including government inaction and mistaken actions, outdated U.S. and global financial regulatory systems, and by the excessive risk-taking of financial institutions. This combination of factors led to a critical stage this fall when the entire U.S. financial system was at risk. This should never happen again. The United States must lead global financial reform efforts, and we must start by getting our own house in order.

"Well, as you know, we're working through a difficult period in our financial markets right now as we work off some of the past excesses. But the American people can remain confident in the soundness and the resilience of our financial system," Paulson said soon after the Lehman Brothers bankruptcy.

In the aftermath of Lehman's failure and the simultaneous purchase of Merrill Lynch by Bank of America, already fragile credit markets froze, so that companies that had nothing to do with banking but needed financing (e.g. General Electric) could not get daily funding requirements which had the effect of sending the U.S. equity and bond markets into turmoil between September 15th and 19th, 2008.

On September 19, 2008, Paulson called for the U.S. government to use hundreds of billions of Treasury dollars to help financial firms clean up nonperforming mortgages threatening the liquidity of those firms. Because of his leadership and public appearances on this issue, the press labeled these measures the "Paulson financial rescue plan" or simply the Paulson Plan.

With the passage of H.R. 1424, Paulson became the manager of the United States Emergency Economic Stabilization fund.

As Treasury Secretary, he also was a member of the newly established Financial Stability Oversight Board that oversaw the Troubled Assets Relief Program.

Paulson agreed with Bernanke that the only way to unlock the frozen capital markets was to provide direct injections into financial institutions so investors would have confidence in these institutions. The government would take a non-voting share position, with 5% dividends for the first year on the money lent to the banks and 9% thereafter until the banks stabilized and could repay the government loans. According to the book Too Big To Fail, Paulson, Bernanke, New York Federal Reserve Chairman Timothy Geithner, and FDIC Chairman Sheila Bair attended the meeting on October 13, 2008, at which this plan was presented to the CEOs of nine major banks.

On October 6, 2014, Paulson testified in Starr v. United States, a lawsuit alleging that the government cheated American International Group shareholders of $40 billion by demanding a 79.9% stake in the company."AIG, either fairly or unfairly, ... became a symbol for all that is bad on Wall Street," Paulson said. He acknowledged that the terms of the bailout were meant to be "punitive."

In September 2015, Paulson was awarded an honorary doctorate of laws and environmental policy by Washington College President and former FDIC Chair Sheila Bair. "Paulson and Bair, Together Again", Washington College, September 24, 2015, retrieved September 28, 2015

In April 2016, he was one of eight former Treasury secretaries who called on the United Kingdom to remain a member of the European Union ahead of the June 2016 Referendum. In June, Paulson announced his support for the Never Trump movement and endorsed Hillary Clinton for the presidency. In his op-ed to The Washington Post Paulson wrote, "The GOP, in putting Trump at the top of the ticket, is endorsing a brand of populism rooted in ignorance, prejudice, fear and isolationism."

Paulson is a leader of the Climate Leadership Council, co-authoring along with James A. Baker III, Greg Mankiw, Martin Feldstein, Ted Halstead, George P. Shultz, Thomas F. Stephenson, and S. Robson Walton a carbon fee and dividend proposal for the United States in 2017 as a climate change mitigation policy.