for Henry Paulson (On the Brink) @ 2010 All Rights Reserved

for Henry Paulson (On the Brink) @ 2010 All Rights Reserved.

Book Review - Sampson I.M Onwuka


The author Henry Paulson recently (2015) celebrated a national bestseller. This review recognize the continues dissent over 2008 financial kamikaze

The crux of Henry Paulson's (2010) is the actions taken by the State and by the Treasury to helm the losses from Banking and other financial institution in 2008, especially the actions he took against Lehman Brothers and Bear Stear which forced their departure from Investment Banking. Lehman Brothers Long Term Government Bond Index (no-longer extant) was used by many trade or financial curates to guesstimate and explicate International Long bond, the LB. The relapse of several competing funds group, led to a form of competition (that was sometimes invented) and were better known by their perform grade developed in part by what of happening in many parts of the banking industries than the supposed saving. They call it Medium term ‘aggregate bond’ which as I have maintained, was solo to prevailing European financial environment, was for many years essential to fixed return with respect to savings which determined the participation of the financial institutions - especially(the Jay Cook and Guy Levy) style of Investment Banking for the long. But the global market was 'On the Brink' in 2006 and by 2008 the losses were serious economic consequences. It may be hard to argue that the global markets and the United States may or may not survived the balance sheet problems from this era, that the relapse into debt and failures to close the gaps was not perhaps overnight sensation.

The problems is the reaction of the man whose we read, it fail into the glove compartment of the Treasury Secretary - Henry Paulson who along with Bernanke and Geithner had to respond to the growing and recurrent problems with Investment Banks. It will cost a trillion dollar to helm some of the losses in Housing and the White House was not in the position to argue or was it expected to react saving through the role of FHFA and the continuing problems of persons of interest such as Jim Lockhart and investment banks considered then as well as now 'Too  Big to Fail'.

If we grant Paulson and his book the merits of 13 (13) initially used by Minsky in some  80's low growth, it defeats the pretension that either the Federal Reserve were drawing something from Treasury or that they saw the consequences of their actions as actions requiring legal foundation given over-stating persuasion of the actions as from their office. It merits here a statement that Henry Paulson did not incorporate the larger danger of default as a historical problem - that risk is both near and persuasive (historical) that the Market was a victim of the indolent efforts to control the price range or that Taylor's rules were essentially out of the question by the 2000 entering of ECB to world market. The fault of historical narrative places Bernnake inches away from the gap in Paulson book.  Bernanke once insisted that medium default rate was not very easy to gauge hence the book defines the reaction of the government and treasury to the collapse of housing markets. If this was primary to the problems of housing that caved in following a decade of hot money and over-priced real estate, it did not sell in the book Henry Paulson - On the Brink.

If the book mentioned the vast role of insurance companies in chugging some lapses in the financial collapse of 2008, the book would have scored with competency it would have scored differently following our understanding of the later days of George W. Bush as President.

During the issue of 2008, Richard Fuld wanted to transform Lehman from being a brokerage to an Investment Bank, a move that was part of the original idea of Universal Banking which the major brokerages and underwriters commercialized. Their business empire and industry was far reaching and consequential, to the degree that major brokerages in US had outlets in nearly everywhere in the world. Richard Fuld was therefore right-on in breaking into the area by asking Treasury and the Federal Reserve of New York, in the crass of the 2008 miscalculations and then exposure, to translate Lehman from Brokerage to Investment Banks with license to CDO customers will allows it to operate like other banks.

By fact, Henry Paulson and Timothy Geithner were both affiliated with Goldman Sachs – were both replacement U.S Treasury Secretaries, manage to still strike down the idea. Timothy Geithner was himself the New York Federal Reserve Chairman and was one of the principal individuals who blocked Lehman’s attempt at loan but essentially helped Goldman Sachs. It was this man who also repeated Richard Fuld’s argument about translating Lehman from brokerage into Investment Bank with CDO, which was still blocked and was eventually used as basis to bail Goldman Sachs. It is true that the issue of Lehman’s survival of the LTCM in Russia may inspire a probable argument that the survival of Lehman in 2008 may or may not have saved the world from the cascading trillions in losses. Henry Paulson, Jr. mentioned that in the case of Lehman and the case of 2008, the debt stories for Lehman was quite deep and the surgical procedure so to speak necessary to redeem the Brokerage was not available.

Henry Paulson Jr., writing in his book ‘On the Brink’ disclosed the relentless effort made by the OFHEO – Office of Federal Housing Enterprise Oversight – to weather down the relentless reports of mismatched mortgages, that were streaming into the Federal Work House and the onus fail on the Government to check the spiral down of some of these credit market. He disclosed that the role of the Treasury in enabling that process made the degree Treasury great, that the case somewhat interfering with the US Federal Reserve was secondary. Paulson goes to show that “By Law, Federal Reserve operates independent of the Treasury Department.” From the statement by Paulson Jr., we easily understand the inadequacy of the power vested on U.S Treasury was under regular circumstances being sufficient to deal with business activity of the day.

I for one, have to state that even the recent issues of relief for Greece and Spain to a large extent, is not so much a problem as it is a situation for the world market given the tendency to repeat the past. What the world has already suffered in the last few decades of currency wars and gold makes a nice argument about the plausibility of gold departure from currency which was the case in the 30’s and 70s.  What happens when you do this is that you roll the clock backwards in business, for instance Sovereign Debt and Wealth existing in bigger countries like England, France, and Germany become seriously disaffected to overall income capacity and disproportional to existing member state or member states. Currency creates independent state from national savings. As such what happens to any member states in the Union will easily carry over to the European neighbors – or so it seems - without creating an interactive financial equilibrium in a standing European economy.

Henry Paulson’s commented concerning ARMs, said “Defaults rates on sub-prime adjustable mortgage loans (ARMs) from 2005 to 2007 were far higher than ever” did not mean that there was a solution which Federal Reserve was honing and had plans which worked in the interest of the country. They simply had no shot at what was happening, but if denying Lehman the bail was appropriate given the colossal losses it inherited in matter of days after the decision to deny Richard Fuld his request for financial credit. Without sympathy it must be said that Lehman Brothers mainly needed 20 billion dollars to helm the tide, but over the time it was much bigger.

In the end, in the case of replacing some of the assumptions about Lehman Brothers during its early losses, they experienced financial kamikaze that started like wafts of wind on a great ocean and gradually became stern and severe. It is said that the US Treasury wanted to demonstrate its rigid policy of lending, but in many ways it was the impact of LTCM which loomed large in the head of Paulson was not forgotten. So based on the information provided to him by the Federal Housing Finance Agency (FHFA) – the regulator of Fannie and Freddie and by the National Economic Council (NEC), Office of Management and Budget, and Council of Economic Advisers, that it was Fannie Mae and Freddie Marc that was on the Brink of collapse and they needed immediate attention. We can however speculate that such position was merely designed to fit circumstances since an LTCM forensic will tend to demonstrate that Lehman under Richard Fuld was not forgotten as a successful company, that despite his effort to force the hands of the Government in such a circumstance, they experienced total loses.


We may sense that US sub-prime by what he just said had a problem as far back as 2005, and that Goldman Sachs and its accouterments were or perhaps were not aware of it of the problems of APX, may or may not noticed that the Index ruined Americans or was setting up the market for a roil,
Goldman Sachs may or may not have wondered why. But as many traders will inform anyone, we are likely to pick a betrayal of Paulson’s own facts, since the Chairman of Goldman Sachs until his Treasury office was Paulson. It is noted that APX, was giving problem as far 2005, and like I have mentioned before, two Goldman Sachs sub-prime mangers - at the time Henry Paulson was in office – Birn Baun and Michael Swenson, are falsely credited with discovering the fault with APX indexing. The problem with US subprime industries has started long before the APX accounting became apparent. If the 2007 was the supposed date that these two cats of Goldman Sachs discovered the faults or so speak baited publicly against the fall of US subprime by way of APX – as Paulson and Geithner acquiesced - most White Tigers can only now pretend that as far 2005, Henry Paulson and Goldman Sachs were unaware of these faults until by magic outcome, their managers discovered it in 2007.

In fact the faults have a history which in many ways began with Goldman Sachs. In such, Paulson indirectly closed his eyes to advantage that the system offered his highly leveraged former Investment Bank, and allowed all kinds of rubbish Ratings to continue long after the huge faults were apparent. In the end his former Investment Bank bailed out as if they lost a mere penny. Only the nature of his rise in Goldman Sachs throw in hint of what happened in NYSE when Floor trading was ended by John Tirsh as President of NYSE. It was him and his colleague such as Henry Paulson that led the way to a system called ‘Archipelago’ which bounded European SEC with NYSE, where old factor 3 loading index, which deals with NASDAQ and investment Banking, could not account for billions and as such have schlepped billions through the hole in the market. Here and even there, the hands of Bernie Madoff and his European counterparts are notable, both in enabling and sacrificing companies at their choice and may have also conspired in fueling or forging a scheme of money tree relating zombie company or companies that did not exist, a scheme that allowed phony, misleading or ‘mislabeled’ companies - passed on as accurate or high in rating - to feature in NYSE registry, where banks played a blind eye, as if they were not aware of what was happening. If we explore the banks that underwrote any form of securities during those Archipelago transition days, from 2001 9/11 incident, especially the most evident of them all, we will uncover the stash of Madoff.