Nuovo Segretario al Tesoro USA

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Stati Uniti: Paulson prossimo segretario al Tesoro
WASHINGTON - Sara' Henry M. Paulson Jr il nuovo segretario al Tesoro degli Stati Uniti. Si e' dimesso infatti stamattina John Snow. La nomina al presidente della Goldman Sachs, comunicano fonti della Casa Bianca, arrivera' a breve dal presidente Bush. (Agr)
 
Henry Paulson Dissects the Corporate Scandals and Asks, Who Is to Blame?


Henry M. Paulson, Jr., chairman and CEO of Goldman Sachs Group, believes that the late 1990s had all the marks of a classic speculative bubble – inflated asset values, a public fascination with Wall Street and investing, and an optimism bordering on euphoria. And now that the bubble has burst, the country is facing “a crisis of confidence in American corporate culture and financial markets.”



Who’s to blame? Everybody, Paulson said in his keynote speech at Wharton’s 2002 Global Business Forum on November 15. Sure, a few crooked CEOs and dishonest stock analysts besmirched the image of corporate America. “But the euphoria was hardly confined to investment banks,” he said. “It struck the media, academia, the best consulting firms, sophisticated institutional investors and small individual investors alike.”



Regulators, accountants and business reporters weren’t vigilant enough. And the public ignored one of the basic rules of investing – and life: “If something seems too good to be true, it probably is.”



From his perch atop what is one of Wall Street’s most prominent investment banks, Paulson, who has been Goldman’s boss since 1999, is well situated to assess the bubble bacchanal and the subsequent hangover. His company was one of the leading underwriters of the stock offerings of technology and Internet companies during the late ‘90s. Among its clients were such successes as eBay and Expedia and such failures as Webvan and eToys.



But this involvement has also brought Goldman and other investment banks to the attention of securities regulators in New York and elsewhere who are digging into whether Wall Street analysts touted stocks publicly while privately disparaging them and whether investment banks seduced CEOs with promises of stock from sought-after public offerings.



Paulson’s comments at the Global Forum came just five months after a well-publicized speech he made in June at the National Press Club in Washington, D.C. There, he declared that Wall Street needed to take part of the responsibility for the public’s loss of confidence in corporate America in the wake of a raft of scandals at companies such as Enron, Tyco and Adelphia. His firm, too, had gotten swept up in the giddiness, he admitted. “We have not done as good a job as we might have in preserving and protecting the appearance of independence of our research analysts,” he said then.



The editorial page of The New York Times called his speech “unusual and compelling.” But at the Forum, Paulson’s message had a somewhat different thrust. While conceding that his bank, like others, had made mistakes – “We certainly could have done a better job as the gatekeeper for the capital markets, particularly with telecom and dot-com IPOs and other financings” – he devoted far more time to cataloging the excesses of the era and pointing out what others had done wrong. “The bottom line is this: When the bubble burst, lots of people lost lots of money, and under such circumstances, it’s only natural to find someone to blame. But the bubble was not the result of a conspiracy of greedy bankers and corporate officers.”



What, then, was the real cause? “Simple human psychology,” he said. Conditions in the economy and changes in technology flowed together, like streams gathering to form a roaring river, to dupe people into believing that the rules of investing had changed. “By 1995, we were in the last third of an 18-year bull market characterized by unusual economic growth and productivity gains.” Inflation was low. Employment was rising. Recollections of the last protracted recession were dim, as were memories of the last bear market. “Genuinely revolutionary technology in the Internet and broadband” had arrived. “This led to an overconfidence and inflated expectations.”



In addition, more Americans than ever were investing, with the number of mutual funds rising from 1,500 funds in 1980 to more than 8,000 in 2000. “The result was like a huge national echo chamber. The most popular television show in America was Who Wants to be a Millionaire. Time magazine had just anointed Jeff Bezos of Amazon.com its Man of the Year.”



The few voices of caution – Federal Reserve Chairman Alan Greenspan, who warned of “irrational exuberance” and economist Robert Shiller, who published a book by the same title – were drowned out by the revelry. Even many bears eventually left their dens and turned bullish. Said Paulson: “In the words of Charles Kindleberger, author of the classic Manias, Panics and Crashes, ‘There’s nothing so disturbing to one’s well-being and judgment as to see a friend get rich.’”



Only after recounting all this did Paulson get to the misdeeds of corporate chieftains – he called it the “erosion of business practices” – which had been the main subject of his June speech. Investors’ expectations that companies would increase their earnings every quarter “put immense pressure on management to push accounting practices to the legal limit and in some cases beyond.” And this pressure “was reinforced by many investment analysts and business journalists themselves caught up in the euphoria.”



Before its collapse, Enron, for example, was lauded as a model for other energy companies. Then came the big bang as the bubble burst. A bear market – and recrimination – have followed. Enron, of course, filed for the largest bankruptcy in American history, and Arthur Andersen, once a model of rectitude, has been effectively dissolved. Meanwhile, investment analysts have been accused of shilling for companies that they knew were built on shaky foundations. Even Jack Welch, once lionized as America’s best CEO, has been criticized for enriching himself at the expense of General Electric shareholders.



The bursting of the bubble, Paulson pointed out, is tied with the bear market of 1937 through 1938 as the second worst in modern American history, after the one accompanying the Great Depression. “The combined losses of the U.S. stock exchanges in 2000 through 2002 represent approximately $8 trillion in market capitalization.”



Everybody – Wall Street, regulators, the media, investors – should step back and assess the mistakes they made, he said. “At Goldman Sachs, we were actually quite disturbed because we saw things [at other investment banks] that we knew weren’t right. We knew we didn’t do them, and we took comfort in that.” Competitors, for example, were paying their analysts for bringing in investment-banking clients and letting analysts invest in the initial public offerings of companies that they covered.



“But that turned out to have been a distinction without a difference because we didn’t adequately insulate our analysts. I got to tell you that if we had to do it over again we would do it differently.”



Paulson added that his company is “now committed to a major effort to improve practices in areas such as investment research and IPO allocation. Equally important, a whole generation of [investment] professionals has been given a healthy dose of skepticism.”



As for regulators, they sometimes didn’t grasp problems until it was too late. They now need to act forcefully where they uncover misdeeds. But they also should “avoid the temptation of overreacting. In my judgment, it would be a mistake to blame our capital raising processes for the bubble,” he said.



The media needs to be more skeptical. “Surely, elements of the business press were powerful advocates for the new technologies and helped to foster the bubble psychology.” And everybody needs to pay closer attention to ethics, which got little attention during the boom. “If there’s one thing that the scandals of the last year have taught us, it’s that ethics must be a core element of how we do business.”


Published: December 19, 2002
 
La cosa onestamente mi sorprende per un semplice motivo...

Paulson qualche settimana fa aveva dichiarato che non era interessato al posto di Segretario al Tesoro per via della poca libertà di azione che gli avrebbe lasciato l'amministrazione Bush, visti i precedenti Segretari che non avevano avuto alcun dire nella gestione del Tesoro...

Ora da qualche parte si scriverà che tutta la Goldman Sachs sta occupando posti di governo in virtu' di qualche setta segreta, magari sionista, per conquistare il mondo :D
 
Draghi non viene pure lui da Goldman o mi confondo ?
 
certo, potremmo, chissa, presto dire
"GS rules the world"...

gioia23
 
Sarebbe bello uno spot dove Snow stringe la mano al subentrante, visti in tv, da un americano in canottiera obeso, in poltrona che beve una Bud's, che fa un bel rutto con la moglie in cucina che chiede: When are next instalments?
 
Darkghost ha scritto:
Draghi non viene pure lui da Goldman o mi confondo ?

appunto. Quando Grisu e' stato nominato Governatore ci si e' subito chiesti come poteva accadere una cosa simile, ci avrebbe venduto il Paese etcetc...
 
Cambio della guardia al Tesoro di Washington. Il dollaro scende a 1,29 sull’euro e cadono tutte le Borse Paulson da Wall Street alle Finanze Usa Il capo di Goldman Sachs al posto di Snow, lascia un «salario» di 38 milioni di dollari
DAL NOSTRO CORRISPONDENTE
WASHINGTON - Per la terza volta in altrettanti anni, George W. Bush ha attinto alla banca d'affari Goldman Sachs per un rimpasto di governo. Ieri ha nominato ministro del Tesoro il suo presidente e amministratore delegato Henry Paulson, al posto del dimissionario John Snow. In precedenza, le aveva sottratto altri due dirigenti, Stephen Friedman, preposto al Consiglio economico della Casa Bianca, e Josh Bolton, l'attuale capo di gabinetto.
Un'onorata tradizione per la Goldman Sachs: la banca d'affari, che ha restituito Mario Draghi all'Italia, fornì all'ex presidente Bill Clinton uno dei più grandi tesorieri della storia Usa, Robert Rubin. Bush ha voluto il cambio della guardia per due motivi: Snow non è riuscito a reclamizzare a sufficienza il miracolo economico presso l'elettorato che a novembre voterà alle elezioni parlamentari; e non ha saputo imporre cambi flessibili, cioè vantaggiosi per il dollaro, alla Cina e ad altre potenze. Mentre non è certo che Paulson, un uomo schivo, sia adatto al primo compito, è certo che lo sia al secondo: non a caso, ringraziando il presidente della nomina, ha affermato che adotterà «tutti gli accorgimenti necessari per mantenere competitiva l’economia». I mercati hanno reagito all’uscita di scena di Snow, almeno a parole un sostenitore del dollaro forte, facendo apprezzare l’euro, a quota 1,29. E peggio ancora hanno reagito le Borse, con Wall Street che ha visto precipitare l’indice Dow Jones dell’1,63% e il Nasdaq del 2,06%. Tutti in rosso anche i listini europei, da Milano (meno 2,18% lo S&pMib) a Parigi (meno 2,42% il Cac40), da Francoforte (meno 2,30% il Dax30) a Londra (meno 2,40% l’Ftse100).
Bush, nel discorso di benvenuto a Paulson, gli ha ieri fissato un programma difficile: l’espansione dell’economia in presenza di una riduzione delle tasse, e il dimezzamento degli enormi deficit del bilancio dello stato e della bilancia commerciale entro il 2009. Gli ha anche additato la strada: oltre alla libera fluttuazione delle monete, una ulteriore liberalizzazione dei commerci.
La storia personale di Paulson, 60 anni, detto Hank, è la tipica success story americana. Figlio di contadini, molto brillante negli studi, il ministro vanta due lauree, una in letteratura a Darmouth una in economia ad Harvard. È stato campione di football americano e ha fatto tutta la sua carriera dentro la Goldman Sachs. Assumendo il nuovo incarico ha rinunciato a uno stipendio strepitoso: 38 milioni di dollari nel 2005.

Ennio Caretto corriere
 
Quei precedenti di Rubin e Draghi
Goldman Sachs ha sviluppato una lunga tradizione di contatti con l’amministrazione americana, e non solo, alla quale ha offerto molti dei suoi dirigenti. Fra i più celebri Bob Rubin (nella foto) , segretario al Tesoro di Bill Clinton. In Italia basti ricordare Mario Draghi (Bankitalia) e Massimo Tononi (attuale sottosegretario all’Economia).
 
n. 127 del 31-05-06 pagina 20

Tesoro Usa: Snow lascia, arriva Paulson
di Rodolfo Parietti
Bush nomina segretario il numero uno di Goldman Sachs: avrà il compito di favorire il deprezzamento del dollaro

Le reazioni: il biglietto verde ai minimi da sette settimane contro euro e yen

Rodolfo Parietti

da Milano

Henry M. Paulson è il nuovo segretario al Tesoro Usa. Ha 60 anni, e credenziali di assoluto rispetto: già basterebbero gli otto anni passati alla guida di Goldman Sachs, che di lui hanno fatto il manager più ricco e prestigioso di Wall Street. Ma Paulson è, soprattutto, «Hank» per George W. Bush. Un amico di vecchia data. Ciò che John Snow, da ieri ex numero uno del department, non è invece mai riuscito a diventare. Tenuto sempre ai margini della cerchia ristretta dei consiglieri di Bush, Snow aveva via via visto diventare sempre più gelidi i rapporti con la Casa Bianca, tra rumor di dimissioni cominciati nel dicembre 2004 e diventati tambureggianti negli ultimi mesi.
Nel breve discorso tenuto ieri nel Giardino delle Rose, il presidente statunitense ha riservato poche parole di circostanza per ringraziare Snow. Che pure ha appoggiato la politica di tagli fiscali fortemente voluta dall’amministrazione e offerto un contributo significativo alla crescita economica dell’America, ancora in grado di espandersi nel primo trimestre 2006 a un ritmo del 5,3%, il migliore dal 2003, forte di un mercato del lavoro in salute e di un’inflazione sotto controllo. Paulson dovrà dimostrare di saper far di meglio. E avrà poco tempo: non solo perché il suo incarico durerà appena 2 anni e mezzo, quanti ne restano a Bush per portare a termine il secondo mandato, ma perché a novembre ci sarà il test delicato delle elezioni politiche. Al minimo dei consensi popolari, Bush è convinto di aver trovato nell’amico Hank la persona giusta al momento giusto, anche se fino all’ultimo ha cercato di convincere l’ex segretario al Commercio, Don Evans, ad accettare il Tesoro. Paulson piace a Wall Street (e non potrebbe essere altrimenti), è apprezzato perfino dai democratici, e parla la stessa lingua del presidente. «Paulson sarà il capo del mio team economico - ha assicurato ieri Bush -. Hank condivide la mia filosofia che l’economia prospera quando abbiamo fiducia che il popolo americano risparmi, spenda e investa come meglio ritiene». Appunto: il problema di Bush è la percezione condivisa delle famiglie americane che le cose stiano andando male, come dimostra anche l’ultimo indice sulla fiducia dei consumatori, scesa in maggio ai minimi non più toccati dal periodo dell’uragano Katrina. C’è dunque anche bisogno di un grande comunicatore. E Paulson, ha detto Bush, «è in grado di parlare di economia con parole semplici».
Alla missione «domestica» di riconquistare la confidence del popolo a stelle e strisce, il neo ministro dovrà affiancare quella internazionale. E non sarà certo meno importante. Gli osservatori hanno fatto notare che il cambio della guardia al Tesoro Usa ha sempre coinciso con un diverso orientamento di politica valutaria: era successo con Jimmy Baker nell’85 e poi con Robert Rubin. È dunque probabile che Paulson punti a un ulteriore deprezzamento del dollaro (che ieri infatti è sceso ai minimi da sette settimane rispetto a euro e yen) per aumentare la forza delle merci Usa oltre confine e ridurre il deficit commerciale ed eserciti pressioni ancora più forti sulla Cina per ottenere la rivalutazione dello yuan. L’economia Usa è forte «ma non possiamo prenderlo come fatto garantito - ha detto ieri -: dobbiamo prendere degli accorgimenti per mantenere la nostra competitività nel mondo». Più chiaro di così...ilgiornale
 
New York Times
June 1, 2006
2 New Captains of the Economy Face Volatile Global Markets
By EDMUND L. ANDREWS

WASHINGTON, May 31 — One reached the pinnacle of wealth and prestige as a dealmaker on Wall Street. The other was an academic superstar, brilliant but somewhat shy and more at ease in Bermuda shorts than suits.

But now they find themselves side by side in confronting a stiff new test: helping to guide the economy from a period of fast growth and cheap money through one of higher interest rates, jittery markets and a falling dollar.

Henry M. Paulson Jr., the chief executive of Goldman Sachs and President Bush's choice to become his new Treasury secretary, is expected to arrive at his post at a time when global financial markets are suddenly more volatile and investors are more risk-averse than they have been in years.

Ben S. Bernanke, the former Princeton economics professor who became chairman of the Federal Reserve on Feb. 1, has already endured a baptism of fire as the Fed has struggled over when to stop raising interest rates.

Just a few weeks ago, bond prices dropped and critics complained that Mr. Bernanke lacked "manhood" or at least "Street cred" as an inflation fighter. In more recent days, investors have been rattled by the opposite fear: Mr. Bernanke might be too tough and push interest rates higher than they had thought, potentially slowing or reversing the liquidity-driven investment boom of recent years.

Mr. Paulson provoked speculation about the dollar even before he left Mr. Bush's side at the announcement of his nomination on Tuesday morning.

Mr. Paulson called for "steps to maintain our competitive edge in the world," a bland remark that some investors nonetheless interpreted as code for using a weaker dollar to make American exports cheaper in other countries.

"These two captains are forced to navigate in some very choppy waters," said Richard Yamarone, chief economist at Argus Research. "The message that the Fed is sending is that they don't have a clear grasp on the goings-on of the economy, and the same could be said of the Bush administration."

At first glance, the pairing of Mr. Bernanke and Mr. Paulson looks like an attempt to recreate the celebrated collaboration between Alan Greenspan and Robert E. Rubin in the 1990's, when the economy and the stock market soared and the federal budget swung from deficits to surpluses.

Mr. Greenspan, who ran the Fed, was not an academic but shared Mr. Bernanke's penchant for poring over economic data and challenging conventional wisdom.

Mr. Rubin, Treasury secretary under President Bill Clinton, had, like Mr. Paulson, been a chairman of Goldman Sachs. He teamed up with Mr. Greenspan to champion tough restraints on government spending, employed his credibility on Wall Street to assure financial markets that Mr. Clinton was serious about dealing with the budget deficit and played an influential role in shaping foreign policy.

Mr. Paulson, whose nomination has been praised by Democrats as well as Republicans, is almost certain to win easy Senate approval and become a central player on Mr. Bush's team.

But analysts say both he and Mr. Bernanke need to establish their credibility in financial markets at a time when the economy is in a major transition.

For the first time in nearly two decades, inflation is on an upward rather than downward trend. Energy prices remain near historic highs, even though oil prices dropped on Wednesday as immediate fears of a confrontation with Iran eased. Long-term interest rates — the fuel that powers the housing market when they are low — are on the rise.

Meanwhile, the economy faces structural budget deficits that will not disappear without major changes in taxes and spending, and the Fed could find itself in a clash with the Bush administration if budget deficits remain high.

Perhaps most important, however, investors around the world have become more anxious about the United States' huge trade deficits and its ballooning foreign debt. That is pushing down the value of the dollar, a trend that would help reduce trade imbalances but has also elevated worries about a more painful crash for the American currency.

Much of the uncertainty stems from a shift at the Federal Reserve and other central banks. After propping up economic growth by keeping interest rates far below normal levels, the central banks are removing the cushion of cheap money.

"The marketplace over all is being forced to reabsorb risk that formerly had been underwritten by the big three central banks — the Fed, the Bank of Japan and the People's Bank of China," said Paul McCulley, managing director of Pimco Advisers, the giant bond management firm. "When you've got all three taking away the punch bowl, the partyers at the party are not going to be happy."

Mr. Bernanke arrived at the Fed when monetary policy was already at a tipping point. Having raised short-term interest rates under Mr. Greenspan's guidance for nearly two years by the time Mr. Bernanke took over, Fed officials knew they were nearing the point where they could stop. But because there is such a long lag time between changes in monetary policy and their impact, inflationary pressures were on the rise and economic growth was still torrid.

In late April, Mr. Bernanke confounded markets even as he struggled to explain that the Fed needed to keep its options open by basing decisions on incoming economic data rather than maintaining monetary policy on automatic pilot.

Testifying before the Joint Economic Committee of Congress on April 27, Mr. Bernanke set off a rally by announcing that the Fed might pause in its rate increases to assess the impact of its previous increases.

What startled bond investors was Mr. Bernanke's added twist: that the Fed might pause even if "the risks to its objectives are not entirely balanced" meaning that it might take its foot off the monetary brakes, at least temporarily, even if there were signs of slightly higher inflation risks.

Bond investors, suspecting that Mr. Bernanke might be soft on inflation at a time when energy prices were shooting up, began demanding higher yields on long-term Treasury bonds.

Pundits began accusing Mr. Bernanke of vacillating.

"In jest, I've been saying that Mr. Bernanke needs to regain his monetary manhood," Larry Kudlow, an economist and talk show host, recently told viewers on CNBC. "He was people-pleasing Wall Street. Now he has got to go back on message."

Barry Ritholtz, an economic consultant and operator of an economic blog, the Big Picture, went further and called Mr. Bernanke the "Neville Chamberlain of inflation fighters."

"I got the sense that Mr. Bernanke was appeasing the stock market," Mr. Ritholtz said in an interview. "It's not that he has to go out and prove his manhood and his street-fighting cred. It's just that he has to navigate at a particularly perilous moment in the economy, and he has to navigate absolutely flawlessly."

Two days after raising the prospect of a pause, Mr. Bernanke compounded the confusion by venting his frustration about being "misunderstood" during an off-camera conversation with Maria Bartiromo, a correspondent for CNBC.

Word of the comments set off another round of feverish trading on April 29. Last week, Mr. Bernanke told lawmakers at the Senate Banking committee that his remarks to Ms. Bartiromo had been a "lapse in judgment" and that in the future, he would communicate only through formal channels.

Despite the bumpy path, Mr. Bernanke's first few months have been far smoother than Mr. Greenspan's arrival in August 1987. Bond investors, convinced that Mr. Greenspan could not match the inflation-fighting prowess of his predecessor, Paul A. Volcker, quickly pushed up interest rates on long-term Treasury Bonds.

Yields on 10-year Treasury bonds shot up from 8.8 percent to more than 10 percent during Mr. Greenspan's first two months as Fed chairman. The stock market, plagued by a host of uncertainties, fell 22.6 percent on October 19, 1987.

By contrast, rates on 10-year Treasury bonds have climbed modestly since Mr. Bernanke took office, from about 4.5 percent to about 5 percent today. One crucial indicator of inflation expectations, the difference in price between regular Treasury bonds and special inflation-protected Treasury securities, are not much higher today than when Mr. Bernanke took over in February.

Edward McKelvey, an economist at Goldman Sachs, said Mr. Bernanke's message had in fact been clear even if that left investors unsure about the Fed's next move.

"He is sending a fairly consistent message that says we're going to evaluate the data insofar as they affect the outlook," Mr. McKelvey said. "This is child's play compared to what Greenspan had in the first two or three months of his term."

Mr. Paulson may face his own trial by fire. As Treasury secretary, Mr. Paulson would have authority over the government's policy on exchange rates and the value of the dollar.

Mr. Paulson is likely to continue the policy of his predecessor, John W. Snow, in supporting a "strong dollar" but insisting that its value be determined by market forces. In practice, the administration has been content to let the dollar drift down in value for the last two years, a trend that makes American exports cheaper and imports more expensive.

Mr. Snow did not have to grapple with any major currency disruptions, but Mr. Paulson may not be so lucky.

"There are fewer certainties," said Lou Crandall, chief economist at Wrightson ICAP. "He is walking into an environment where the dollar is widely perceived to be at risk."
 
New York Times
June 2, 2006
A Seamless Major Domo, on Wall St. or in Washington
By LANDON THOMAS Jr.

As Henry M. Paulson Jr. pondered whether to leave the job he loves at Goldman Sachs for a new position of uncertain power at the Treasury, he received some crucial advice earlier last month from James A. Baker III, a Treasury secretary in the administration of President Ronald Reagan.

It is not every day that a Wall Street chief executive gets career counseling from a Washington power broker like Mr. Baker. But for Mr. Paulson, the words of wisdom represented a payoff of sorts from a series of relationships he has forged with Washington insiders through the counsel of his chief of staff and closest adviser at Goldman Sachs, John F. W. Rogers.

The conversation was brief, but Mr. Baker's argument was blunt and to the point: assuming that Mr. Paulson would be ceded broad control in economic policy, the job could be a highly influential one.

The role of Mr. Rogers, a member of Mr. Baker's inner circle since 1981, in putting his boss at ease about pursuing a career in government underlines a growing tendency on the part of Wall Street chiefs to seek out executives with deep Washington ties to be their closest advisers.

Schooled in the fine arts of managing vast bureaucracies and even vaster egos, men like Mr. Rogers, who has just turned 50, have found that these talents — always held in high regard in Washington — are also in demand on Wall Street. That is especially the case at Goldman Sachs, a firm with a long history of sending its finest to Washington. Indeed, before working with Mr. Paulson, Mr. Rogers was chief of staff to Jon S. Corzine, Mr. Paulson's predecessor, who after a term in the United States Senate is now governor of New Jersey.

Thomas R. Nides, for another, a former top staff member for Thomas S. Foley, a former speaker of the House, and Mickey Kantor, a former United States trade representative, serve in similar capacities to John J. Mack, the chief executive of Morgan Stanley.

"These guys are doers, not talkers," said Kenneth M. Duberstein, a chief of staff under President Reagan. "They understand power whether it is in the corporate board room or in the White House. They are not so much enablers for getting C.E.O.'s to Washington as they are Sherpas for getting things done."

To be sure, it was Mr. Paulson's credibility on Wall Street and his success at Goldman that put him atop President Bush's wish list. And Joshua B. Bolten, the president's new chief of staff and a former Goldman executive himself, played a vital part in assuring Mr. Paulson that he would have a clear and defined policy role.

Nonetheless, the behind-the-scenes influence of Mr. Rogers — who served under Mr. Baker when he was chief of staff and secretary of the Treasury in the Reagan administration and secretary of state in the administration of Mr. Bush's father — was such that he is now deliberating a return to Washington to work again for Mr. Paulson, this time, in all likelihood, in the capacity of a senior deputy.

Friends of Mr. Rogers, who does not welcome public scrutiny and declined to comment for this article, compare him to the George Smiley character in John Le Carré's spy novels. Mr. Rogers, a slight, retiring man with a preference for tan raincoats, brings the kind of technical staff expertise and, his friends say, the ability to gravitate toward the seat of power in bureaucracies that recall Le Carré's spymaster.

More than anything, they say, he understands how to make himself indispensable to powerful people.

His experience in Washington dates to the mid-1970's, when he juggled an internship in the Ford White House with his bachelor's degree program at George Washington University.

His first connection was to David R. Gergen, who joined the Ford administration as a counselor to the president and later served presidents from Richard M. Nixon to Bill Clinton.

As Mr. Gergen tells the story, on his first day at work, he asked how he could secure some furniture for his empty office in the Old Executive Office Building. He was told he could call the General Services Administration and wait two months or call Mr. Rogers, then a 19-year-old intern, for quicker results.

"The next day I had a desk, a couch, a TV set and artwork," Mr. Gergen recalled. "I can say that I discovered the phenomenon of John Rogers. I was so impressed with his enterprise that I said, 'Will you come work for me?' "

Mr. Rogers's career ascended swiftly. He joined Mr. Baker in 1981 when he was named Mr. Reagan's chief of staff and was on the ground, plugging in phones and hanging pictures on the walls as the new administration set up shop.

Over time, his responsibilities increased. He moved with Mr. Baker to the Treasury, where he was an assistant secretary for management and, after a period in private business, returned with Mr. Baker, becoming under secretary of state for management.

In 1994, he joined Goldman Sachs, where his ability to make the trains run on time endeared him to superiors.

He was made a partner in 2000 and is now a member of the firm's management committee, responsible for external relations as well as the firm's philanthropic activities, in addition to his prime role managing the hectic activities of Mr. Paulson.

Mr. Rogers almost always accompanies Mr. Paulson on foreign tours and sits in on his meetings with political and corporate leaders.

In some ways, the two are a bit of an odd couple. Mr. Paulson is very much of an alpha male: he will challenge colleagues to wrestling matches and once halted a game of paddle tennis to vomit before resuming play and winning the match. Mr. Rogers is less the competitive athlete, and his hobbies, including historic preservation, tend to be more sedate.

They both have a passion for international affairs, and Mr. Rogers's wife, like Mr. Paulson, has had a deep interest in and involvement with China. Though he has worked at Goldman Sachs for 12 years, Mr. Rogers's family lives in Washington and he commutes home each weekend. And while speculation is rife that he will join Mr. Paulson in Washington, others say that he may find it difficult to make a break from Goldman.

"John loves institutions," Mr. Gergen said. "He loved the White House, the Treasury and the State Department. And now Goldman Sachs."
 
New York Times
June 2, 2006
A Tax Rule Could Save Treasury Nominee Millions
By ERIC DASH

Henry M. Paulson Jr., the nominee for Treasury secretary, has a big reason to support tax relief.

Because of a little-known provision in the federal tax code, Mr. Paulson, the departing Goldman Sachs chief executive, could receive a tax break of at least $48 million if he is confirmed.

The tax rule, Section 1043 of the Internal Revenue Code, allows individuals who are forced to sell stock to meet federal conflict-of-interest rules to defer paying capital gains tax, so long as the proceeds are reinvested in government bonds, diversified index funds and other similar instruments. The provision applies only to employees in the Executive Branch (Congressional lawmakers, Supreme Court justices or ordinary taxpayers need not apply) and is intended to "minimize the burden of government service" resulting from a forced divestiture.

If confirmed, Mr. Paulson is expected to give up control of at least $700 million, a fortune built largely from Goldman Sachs stock, by putting those assets in a blind trust. Then, it is likely that Mr. Paulson will be required to sell his Goldman Sachs shares to avoid any conflict of interest. The tax provision, accounting specialists said, represents an opportunity for Mr. Paulson to use the sale to diversify his holdings without paying capital gains tax on the bulk of those Goldman shares, which have almost tripled in value since the investment bank's initial offering in May 1999.

"If you do that, the gain you diverted from the Goldman sale will never be taxed," said Robert Willens, an accounting expert at Lehman Brothers. "This has got to be part of the inducement that allows them to take these positions."

Mr. Paulson's 3.23 million shares of Goldman stock are worth more than $495 million, based on the most recent regulatory filings and yesterday's closing price of $153.55 a share. (This does not include the value of his restricted stock units and options, which are generally taxed as ordinary income, not capital gains.)

Assuming conservatively that the most of those shares have a cost basis at or below the initial offering price of $53, he would have roughly $325 million in capital gains, said Brian Foley, an independent compensation consultant in White Plains. Deferring the 15 percent federal tax results in the $48 million break.

"If he simply retired, he would be able to actively manage that account in a robust way," Mr. Foley said. "If it goes into a blind trust, it will be managed more conservatively. There is a price for the break, and the bottom line is he is giving up the ability to control the investment of those funds."

Even so, Mr. Paulson has President Bush's father to thank for the assistance. The special tax deferral was inserted into the Ethics Reform Act of 1989 after the first President Bush urged Congress to pass new laws addressing the significant tax disincentive the required sales seemed to have on high-level executives moving into federal jobs.

Other White House officials have probably benefited from the provision. Commerce Secretary Donald L. Evans and Defense Secretary Donald H. Rumsfeld sold part of their holdings before moving into government. So did President Bush's first Treasury secretary, Paul H. O'Neill, who grudgingly agreed to sell about $100 million of Alcoa stock after public watchdog groups complained.
 
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