Nonfiction — Kindle edition. Grand Central Publishing, 2010. 496 pgs. Purchased.
Subtitled “Inside the Race to Stop the Collapse of the Global Financial System”, Paulson’s book details the three years he served as the U.S. Secretary of the Treasury during the world’s most cataclysmic financial crisis since the Great Depression. Major institutions like the government-sponsored enterprises of Fannie Mae and Freddie Mac and private corporations including Bear Stearns, Lehman Brothers, AIG, and Citigroup teetered on the edge of collapse – a truly once-in-a-lifetime economic nightmare that Paulson was charged with solving.
Paulson stand out in my mind not because of how he served as Secretary of the Treasury during the complete meltdown of our (global) financial system but because of how angry the curator of the Treasury Building was over his official portrait. The rolled sleeves and hands jammed in pockets is, honestly, not a prestigious stance for someone befitting of his role. Yet, having read Paulson’s memoir, I can see why he chose this stance for his portrait. He desperately wants to be seen as a laid back, laissez faire kind of guy.
As an economic major, I did not anticipate having such a hard time following the economics explained in Paulson’s book. I don’t know if I needed more detail or less, but there shouldn’t be an expectation that everyone who picks up this book has a Ph.D. in economics. Reading this book was also a bit like reading Paulson’s daybook; whole sections gave a play-by-play of how he spent the day in meetings rather than what was said. This makes for a weird blend of memoir and textbook.
Paulson and I differ in ideology but I was glad to see he admitted that while he is a firm believer in free markets and “certainly hadn’t come to Washington planning to do anything to inject the government into the private sector”, even he had to recognize that “taking [Frannie and Freddie] over “was the best way to avert a meltdown, keep mortgage financing available, stabilize markets, and protect the taxpayer” (loc. 220-221). This is only part where Paulson seems comfortable with crossing the ideological aisle. Even as he and Ben Bernanke, chairman of the Federal Reserve, brokered merger deals between private enterprises (going so far as to call CEOs and dictate stock offers), Paulson is insistent that a free-market system without government intervention is the only “good” system. Obviously, a system without regulation – the very regulation that he as CEO of Goldman Sachs lobbied to remove – does not work, and I found it humorous (in a laugh or I might cry way) that Paulson closes the book by lobbying for a new regulatory system to replace out “hopelessly outmoded patchwork quilt built for another day and age” (loc. 70222).
One of the minor details that Paulson confesses is how the Secretary of the Treasury and the Chairman of the Federal Reserve (Fed) are legally not allowed to discuss and collude. It’s a minor detail you might miss if you’re unfamiliar with the Fed or don’t read the book closely enough as the amount of conversing between Bernanke and Paulson might believe you to believe otherwise.
The Honors Project:
I read this book for The Honors Project, my own personal challenge to read more books about economics, food, and/or geography in preparation for writing my honors thesis. My goal for this project is to learn as much as I can about these topics so I can formulate better questions and, in turn, produce a better honors thesis. You can find out more information by checking out my introductory post, project post, or spreadsheet of titles.