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Marketplace Scratch Pad

What really happened last year, part II

Scott Jagow Sep 30, 2009

A couple weeks ago, I pointed out a GQ story that chronicled the crazy days at the White House last September. Today, Vanity Fair hits the newsstands with a story about what former Treasury Secretary Hank Paulson had in mind for his old company, Goldman Sachs.

It comes from New York Times reporter Andrew Ross Sorkin. Sorkin’s forthcoming book is “Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System–and Themselves.”

In the Vanity Fair excerpt, Sorkin says Paulson wanted to arrange a “shotgun wedding” between Goldman Sachs and Wachovia. Paulson and Wachovia’s CEO were both former Goldman execs.
More from the Raw Story:

Sorkin reports that Warren Buffett was also contacted about investing in the merged company, but told a banker at Goldman that it would never happen. “By tonight the government will realize they can’t provide capital to a deal that’s being done by the former firm of the Treasury secretary with the company of a former vice-chairman of Goldman Sachs and former deputy Treasury secretary,” Buffett said. “There is no way. They’ll all wake up and realize, even if it was the best deal in the world, they can’t do it.”

Jim Wilkinson, Paulson’s chief of staff, realized that such a deal would be a public-relations nightmare at the worst possible time–just as they were trying to pass TARP. “Hank, if you do this, you’ll get killed,” Wilkinson frantically told his boss. “It would be (f—ing) crazy.” Paulson, he said, would lose credibility; he would be accused of lining the pockets of his friends at Goldman; the “Government Sachs” conspiracy theories would flourish.

Yes, thank goodness that hasn’t happened.

Sorkin also says the Fed tried to merge Goldman and Citigroup!

…Vikram Pandit, Citi’s C.E.O., rejected the idea. “Well, that was embarrassing,” (Goldman CEO Lloyd) Blankfein exclaimed after he got off of one phone call with Pandit.

Vanity Fair hits newsstands today in LA and NY; nationwide a week from now.

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