Paulson Gave Hedge Funds Advance Word

According to Bloomberg, former Treasury Secretary Hank Paulson told a group of hedge fund managers in 2008 that he was considering a plan “for placing Fannie and Freddie into conservatorship — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.”

At the same time, he was telling Congress and the New York Times a very different story: that the firms must remain shareholder owned.

Felix Salmon: “What on earth did Hank Paulson think his job was in the summer of 2008? As far as most of us were concerned, he was secretary of the US Treasury, answerable to the US people and to the president. But at the same time, in secret meetings, Paulson was hanging out with his old Goldman Sachs buddies, giving them invaluable information about what he was thinking in his new job… And the crazy thing is that we have no idea how many of these meetings there were, or how long they went on for.”