“It’s ridiculous that I can’t deal with Goldman at a time like this!” Paulson complained to his general counsel, Bob Hoyt. It was September 17, 2008, just two days after Lehman Brothers collapsed and less the 24 hours after AIG was rescued with $85 billion. Paulson thought Goldman could be next.
In Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, Sorkin recounts how Paulson secretly sought a waiver from an ethics letter he signed when he first took office agreeing not to get involved in any matter related to Goldman, his former employer, during his entire term. The original letter voluntarily went beyond the usual one year requirement, but he now felt with the system in free-fall, he needed to be able to dsicuss options with the firm. Paulson was supposed to take part in a three p.m. call with Bernanke, Geithner, and S.E.C. chairman Christopher Cox to discuss Goldman Sachs and Morgan Stanley, but unless he could get a waiver, he would be unable to participate.
Within an hour, the waiver was granted. At the time, however, the waiver was not disclosed to the public, in part, out of fear it would raise more questions about the government’s actions and perhaps lead to a bank run on Goldman.