Hank Paulson thinks Lloyd Blankfein is really smart. Is that a crime?

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It turns out Todd Purdum was paying regular visits to Hank Paulson at the Treasury Department over the course of 2007 and 2008. Now he’s put together what Paulson told him for a big Vanity Fair article. There’s nothing new in it, really, but it’s rich in fascinating detail that can better inform some of the big arguments of the past year. For example, Purdum has assembled some interesting remarks related to Paulson’s Goldman Sachs successor Lloyd Blankfein. First:

Paulson laughed when he remembered calling Lloyd Blankfein to tell him that he’d be taking the Treasury job after all, and that Blankfein in turn would take over as head of Goldman Sachs. “I think I surprised and delighted him,” Paulson said. He “thought it was great for the country—and for him.

Second:

In August, The New York Times reported that Paulson had sought, and received from Treasury lawyers, permission to talk with Lloyd Blankfein, his successor as Goldman’s C.E.O., and ultimately spoke with him 24 times in the six days following the A.I.G. crisis. In Paulson’s conversations with me, many casual references gave the impression of a man continually on the phone with players on Wall Street, and at one point he singled out Blankfein (along with Ben Bernanke) as someone “at a different intellect level than some of the rest of us.”

I’ve never bought the argument that Paulson was consciously out to wipe out Lehman Brothers and save Goldman Sachs last fall. That sort of behavior just doesn’t square with anything I’ve learned about the man. Plus, it’s not as if he and Blankfein were all that chummy—Blankfein was thrilled to see Paulson leave Goldman. It was Goldman’s importance and Paulson’s respect for Blankfein’s smarts that motivated his frequent phone calls.

What is plausible, though, is that Paulson saw Lehman’s fall as deserved but Goldman’s (and Morgan Stanley’s and Citigroup’s and Bank of America’s) potential fall as indicative of a systemic failure that had to be prevented. Because, you can hear Paulson thinking to himself, Lloyd Blankfein is much smarter than Dick Fuld is and Goldman is much better-run than Lehman.

And here’s the thing: Lloyd Blankfein probably is smarter than Dick Fuld, and Goldman probably was and is better-run than Lehman was. It’s just that allowing that determination to be made by a former Goldman CEO (in part, at least; Paulson describes Ben Bernanke and Tim Geithner as equal partners) means that it will forever be open to questioning and criticism.

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