Government Sachs

Felix Salmon: Hank Paulson's Inside Job

If your local Occupy protest is looking a bit weary, here’s some news to get them rearing: in July 2008, Treasury Secretary Henry Paulson met with a group of elite hedge-fund managers and outlined for them a scenario in which the government placed Fannie Mae and Freddie Mac in conservatorship—material nonpublic information that the hedge funds could then use to their advantage. “I think he was downright pathological in giving inside information to his old Wall Street buddies,” writes Reuters’s Felix Salmon, noting an earlier meeting in June 2008 between Paulson and the Goldman Sachs board. “Paulson was giving inside tips to Wall Street in general, and to Goldman types in particular: exactly the kind of behavior that ‘Government Sachs’ conspiracy theorists have been speculating about for years. Turns out, they were right.”