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19 of 22 people found the following review helpful
on October 31, 2012
"Between March and September 2008, eight major U.S. financial institutions failed - Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual, and Wachovia --- six of them in September alone.....This, the most wrenching financial crisis since the Great Depression, caused a terrible recession in the U.S. and severe harm around the world. Yet it could have been so much worse."

Thus Hank Paulson summarizes, in the Afterword, the major challenges he faced as Secretary of the Treasury, a post he assumed on July 10, 2006 and left on January 16, 2009. And this does not mention other institutions that would have failed had they not been propped up (GE Capital, Chrysler, GM, and the entire money market industry after the Reserve Primary Fund broke the buck).

In the recently released "Bailout: an inside account of how Washington abandoned Main Street while rescuing Wall Street", Neil Barofsky, the former Special Inspector General in Charge of Oversight of TARP, details his efforts to constrain the Geithner Treasury from unconditional dispersal of hundreds of billions of TARP funds to the largest banks with no oversight. Former FDIC Chief Sheila Bair recently said of Geithner, "Tim seemed to view his job as protecting Citigroup from me, when he should have been worried about protecting the taxpayers from Citi." While Geithner did much to accelerate what the New York Times called a "no-strings windfall to bankers", the first $350 billion was dispersed under Paulson. Was he a hero who kept the world from falling over the "brink", or was he just rescuing his inept investment banker buddies and sending the tab to the taxpayer as some would contend? What evidence does On the Brink offer?

One indeed can make the case that Paulson was the right man at the right time since only a former CEO of Goldman Sachs had the necessary knowledge of financial markets and the professional gravitas to demand attention from the likes of Jamie Dimon of JP Morgan, John Mack from Morgan Stanley, Lloyd Blankfein from Goldman Sachs, Vikram Pandit from Citigroup, John Thain from (then) Merrill Lynch, Brady Dougan from Credit Suisse, and Robert Kelly from Bank of New York Mellon.

But, one can also argue that, having drunk the Goldman Sachs kool-aid, Paulson saw only one response to the crisis - save the big banks, everything is secondary. As the crisis unfolds, it seems that Paulson and his team move heaven and earth to accommodate financial institutions but underwater homeowners are given short shrift and then only to get more money for the banks: "...devising one [a mortage mitigation plan] would be critical to getting congressional approval to release the final tranche of TARP."

Paulson summarizes, "As first responders to an unprecedented crisis that threatened the destruction of the modern financial system, we had little choice [but to take the actions they did]." He repeatedly invokes images of "market panic", "grave distress throughout the world", "financial catastrophe", "serious risk", "the world falling apart", "all hell [breaking] loose", "[threats to] the entire financial system", etc, etc as justification for his actions.

But, throughout this crisis, many members of Congress asked Paulson to delineate the consequences of NOT bailing out the big banks, and, for the most part, he seems to duck the issue then and now. In one instance, he explains, "[Florida representative Adam Putnam] suggested that I needed to tell people more explicitly how bad it would be if the financial system collapsed....but scaring the public to win support would only make things worse economically." And, "...this dilemma haunted me throughout the crisis - how to make the public understand the grave situation we faced without inflaming the markets even further."

But what about now, in this Copyright 2010 book? Wasn't this the great opportunity to explain the Sum of All Fears and spell out how the dominoes could have fallen? The only clue we get here is that hundreds of billions were dispersed so that credit would continue to flow ("..if credit stopped flowing, businesses would shut down across America and many, many jobs would be lost."). But, you can't help but hear Eartha Kitt singing "Santa Baby" as you read about the fortune lavished on the big banks who promptly sat on the funds and provided no sugar for Daddy.

Whether you agree with his actions or not, ultimately the nation owes a debt of gratitude to Paulson for stabilizing a chaotic situation and you have to admire his fortitude in dealing with wave after wave of staggering problems. However, given the strong residue of resentment that still exists over how TARP (and related programs) were handled, On the Brink represents a missed opportunity to dispel some of that resentment.

A final note: the Afterword makes for interesting reading as Paulson lists his recommended actions for preventing another similar crisis. Guess how many of his recommendations have been implemented?
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94 of 122 people found the following review helpful
on January 24, 2011
Like so many "over the shoulder" assessments of major historical events, Mr. Paulson's account is very self-serving.
He doesn't bother to address why - when the government had tremendous leverage in working out the bailout of AIG - it did next to nothing in holding banks like Goldman Sachs accountable for their poor decision-making. So AIG, propped up by American taxpayers, paid 100 cents on the dollar for the credit default swaps purchased by Goldman Sachs. These swaps in themselves were a suspect approach to managing risk. Moreover, the government never required the investment firms - whose senior management made atrocious gambles - to replace these inept executives (such as GS's Lloyd "We're doing God's work" Blankfein) although they didn't hesitate to take out the head of GM (Rick Wagoner)when we bailed out the auto industry.
So how to explain Mr. Paulson's role in all this and his self-justifying apologies for greed? Well here's an astonishing coincidence: he's the former CEO of Goldman Sachs. Surprise, surprise! And another tidbit about where Mr. Paulson acquired his ethical compass: he was a special assistant to John Ehrlichman in the Nixon White House.
I invite people to read this book, but I would advise against attaching any credibility to Mr. Paulson's view of the near collapse of our financial system.
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114 of 151 people found the following review helpful
on February 1, 2010
A book like this should be read only along with books like The Failure of Risk Management: Why It's Broken and How to Fix It or The Black Swan: The Impact of the Highly Improbable. These books are about the much broader topics of risk management and risk in finance, respectively, but they do put On the Brink in context.

Paulson has written a detailed, blow by blow, narrative account of several specific meetings leading up to and during the financial crisis. Less of the book deals with stepping outside of these meetings to analyze other specific causes, but there is some of that. The reader has to be careful of an attempt by Paulson to recast his own role in a more favorable light, but I haven't seen anything detailed enough to specifically contradict him, yet.

Paulson does mention an interesting and almost complete list of players in this crisis - Freddie, Fannie, Bernanke, Bush, etc. But he is almost silent on some of the more subtle players like the mathematical models that underestimated these risks (Taleb and Hubbard do and excellent job of this). He reiterates throughout the book that the events seemed "impossible" and yet they are events that seem to happen once or twice a century (Especially considering some of the relaxed regulation and oversight that preceeeded it).

He does mention the role of Credit Default Swaps in the crisis but not, say, the Gaussian Copula, Options, or Value at Risk. The use of such methods are at least partly to blame.

The reader has to assume Paulson's agenda of getting history to come out the way that casts him the way he would like to see it. But it is still an excellent account. We should like to see the accounts of Bernanke and Geithner someday and compare them side-by-side.
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15 of 19 people found the following review helpful
on May 16, 2011
I just finished reading all the reviews for Paulson's book and feel I must live in a parallel universe. Isn't having Hank Paulson a) become Secretary of the Treasury in charge of taxpayers' money, and b) become a reviewer of the crisis he helped create be like having the fox write all about the hens? What the heck is going on here? Need I remind everyone that he was the multi, multi- million dollar head of Goldman, one of the primary arch villains of the collapse, DURING the crisis and he cashed in on all his mistakes after the crisis. The salient questions here are: 1) Why didn't he do something in 2005, 2006, 2007 before the crash? Where was he then??? 2) Why were none of the major culprits - BOA, CitiBank, Merrill, and especially, AIG - not severely punished? 3) Why did it have to take up to 14 Trillion of taxpayer money...and still counting? 4) Why has there been no criminal charges levied and no one charged with a major crime? Unbelievable. What am I missing here? This guy is anything but a 'savior' or 'hero'
as some of you have suggested. He may be a good writer and he may provide some interesting insider accounts, I suppose. But, do not forget he has blood - financial blood - all over his hands.
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5 of 6 people found the following review helpful
on January 18, 2012
"Hank" Paulson's record of the economic meltdown of 2008 is a good primer on the events from an insider's perspective. It's fast paced and well written. It brought back many memories and emotions from those uncertain days. The books value is in the record of the event that took place and the reactions of key insiders, Bernanke, Geithner, Pelosi, Reid, Boehner, Frank, Dodd and others. Clearly, Paulson was respected by both political parties and that helped him work through the fast breaking events of the collapse.

The first shock that hits you in the book is not financial but political and personal. The book's Foreward was written by Congressman Barney Frank. Frank's lead-in is an indicator of the respect he had for Paulson. As you read through the book you can clearly see the respect Paulson had for Frank. He knew where the political power was and how to use it. What did surprise me was Paulson's power in the halls of Congress especially given he was part of a lame duck administration. He presents himself more as a knowledgeable but charming diplomat, than a hard nosed Cabinet-level politician. This may be part of Paulson's bias in writing. Other than the battle over TARP, leaders in both parties seem to capitulate to him and Bernanke.

As some of the other reviewers noted, this is not an objective book. Paulson was a major Wall Street insider and clearly a huge supporter of President Bush. However, his relationships with key Congressional Leaders showed that the substance of what Paulson proposed was not partisan. Greed and power is bi-partisan. When it comes to money, all politicians love it. The partisanship was in the implementation. This was most clearly seen in the battle on how to use the TARP money.

My favorite quote from the book is when Paulson and Bernanke were addressing Congressional leaders on the need for a $85 billion bridge loan for AIG. In that meeting Paulson wrote Barney Frank asserted himself and said "Where did you find $85 billion?". Bernanke responded back "We have $800 billion." The way I read it , was as if Barney Frank was envious of Paulson's find and Ben Bernanke silenced him by making him the financial midget in the room.

While I was reading I went to Youtube and watched some of his "Sunday show" interviews. You could see he was tired and spent. However, one in particular with George Stephanopoulos when asked if other institutions are in the same shape as Bear Stearns, at that moment he looked and acted visibly scared of his potential answer. These interviews helped put a face to what he was describing in his book regarding his physical and mental state along with knowing the market's would dissect and parse his statements.

Ultimately, what emerged from the narrative was a clear picture of a financial system completely out of control and driven by short-term greed and manipulation. I'm not sure that will ever change. However, I can't see anyone who reads this book objectively, not coming away with the opinion we need to regulate the financial industry in new and better ways.

I recommend it.
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5 of 6 people found the following review helpful
on July 19, 2011
Read this book and Too Big To Fail after seeing the HBO movie. Paulson intrigued me partially because he's from a couple towns down the road from me. This book is very approachable and kept me wanting to turn the page on my Nook. Sometimes the cast of characters and government agencies and programs get a bit confusing, but it didn't take away from this remarkable story. Paulson presents himself as a practical man grounded in his Midwest roots devoted to his family and religion. One irony is when he remarks that he often chastised is fellow bankers for living in lavish mansions, meanwhile he goes off and buys an island. He states throughout the book that he admires how President Bush handled the crisis and that he got skeptical family members to feel the same. However, except for getting accounts of the President saying do whatever is needed, we aren't given any insight into the Presidents handling of the crisis.

Since Mr. Paulson was the CEO at Goldman Sachs while this crisis was brewing, I would love to read his take on what was happening out on the street that brought this crisis to bear. Maybe a prequel?

Brian McAndrews
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7 of 9 people found the following review helpful
on March 22, 2010
Disclosure: The author was once my boss, although there is no prospect he'd ever have known that. I was a mere halfling among 25,000. Consequent additional disclosure: by dint of said employment, once upon a time I suppose I helped, in a small way, "the Vampire Squid jam its blood funnel into anything that smelled like money", as it was so enchantingly put in a celebrated Rolling Stone article. It didn't feel like that's what I was doing at the time. Honestly.

Now: seeing as it is perhaps the defining socio-economic and political sequence of events since the Second World War: the-near-collapse-of-the-Western-Capitalist-system-as-we-know-it; the horrifying few months triggered by (but not really including) 2007's "Credit Crunch", which brought down Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Washington Mutual and ran such veritable institutions as Morgan Stanley and even the dear old Vampire Squid itself close, it's odd that it doesn't have a convenient label. So let's call it "The Meltdown".

There have been many - and are sure to be many more - rip-snorter accounts of The Meltdown (my favourite, present company excepted, being Andrew Sorkin's Too Big to Fail) but most suffer, at the limit, from the need for well-intended guesswork. For this was a crisis of momentous actions taken by a few individuals and went on largely discreetly and behind securely closed doors. Any journalist, no matter how good her sources, is forced into educated speculation or must rely on hearsay for the vital exchanges. After all, who said what to whom is the real story of our Close Brush With Apocalypse.

I say most accounts of the Meltdown suffer this failing; this one doesn't: If ever someone were placed to write the definitive account of the near-detonation of the capitalist system as we know it, it is Henry J. Paulson Jnr., 74th secretary to the U.S. Treasury.

In pretty much every significant exchange, Paulson was there; in most cases creating it. Prior to assuming that role in 1996, Hank Paulson was CEO of the good old Vampire Squid (did I say Vampire Squid? I meant "Pre-Eminent Global Investment Bank"), Goldman Sachs for a decade leading up to The Meltdown. As is the habit of Goldman high executives, on 2006 - when all was peachy - Paulson did the decent thing in the name of "public service", stopped poaching and turned game keeper. If he had had any inkling of what was coming down I dare say he would have run for the hills. As it was, he accepted the role only reluctantly. Though it seems odd to say it, we should all be thankful that he didn't, and therefore didn't. Paulson's unique expertise, integrity and idiosyncratic personality may just have made the difference. It was a pretty scary couple of months. It really could have gone thermonuclear.

About that idiosyncratic personality. For a certified Master of the Universe (and a boss, as a matter of fact), Hank Paulson was - and is - a singular and peculiarly likeable man, and this book is very much in keeping with his bluff demeanour: not cut from anything like the same schmoove-schmoozing lounge suit cloth as his contemporaries, Paulson, a gruff, hoarse, angular figure who wears a Casio watch, eschews medicine on faith grounds (other than an obligatory plastic cup of diet coke at breakfast), genuinely cares about the environment (resorting to "birding" with his wife at all conceivable opportunities, including for a half hour before dinner at Camp David, which makes for (unintended) comic relief in an otherwise pretty grim book). He's no politician, either - his lifelong blunt directness often ruffling the carefully coiffured plumages of the political classes. Charm being so important on Wall Street and Capitol Hill, it does make you wonder how Paulson got anywhere near as far as he did, but his social cack-handedness is charming in its way, and on at least three other vital scores Paulson has a very long suit: integrity, intelligence and experience. Paulson's candid assessment of his own social awkwardness navigating the tricky waters of Capitol Hill is disarming.

This is a great account of The Meltdown and in the abstract it has much to recommend it. Were it not for the competition, I'd recommend it unhesitatingly. Its misfortune is to pale, as a piece of writing and narrative, in comparison with the excellent Too Big To Fail. So, if you were going to read one (and only the truly dedicated would need more than that), I would read Sorkin's book. The irony is that (seeing that Paulson largely validates Sorkin's narrative) only by Paulson's book's existence is Sorkin's rendered fully credible.

Now I'm confused, but I think I know what I mean, and hope you do too.

Olly Buxton
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6 of 8 people found the following review helpful
on September 7, 2011
Another "hey it's not REALLY our fault... really!" apologist for avarice, greed, and murdering orphans. Now he's writing a book for himself and the rest of the most destructive terrorists since 9-11. Arguably, they caused more fiscal damage (destroyed ~33 trillion USD in wealth since 2006) and if you count the additional suicides above the rate in 2005, 86,000 deaths. So they killed more people AND destroyed more wealth than the people who rammed two planes into the WTC, one into the Pentagon and one into a cornfield. We've been going after the wrong people this whole time... go figure.

When I read this book, it was similar to viewing the crisis through a polarizing lens. It blocked out all of the information along the axis that would make Goldman look bad, and skewed the information about the rest of the wall street morons who didn't know enough about math to realize that their models were hopelessly inadequate. If you want a real idea of why they're such fools, read "On Default Correlation: A Copula Function Approach", by David Xi. Then read the conclusion- HE SAYS CLEARLY THAT IT'S AN APPROXIMATE MODEL AND NOT AN EXACT MEASURE. It's based off of Gaussian electrostatics and magnetism, like all of Carl's other work. I guess the hedge fund managers who used David's function were too busy wallowing in their recently appropriated wealth to bother trying to understand the mechanics of what was actually making them money.
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2 of 2 people found the following review helpful
on February 22, 2014
I am impressed with Paulson's efforts at saving the economy even though his old firm, Goldman Sachs, helped to fuel the problem. Paulson's side of the story is interesting. I can't imagine trying to solve all the sudden crises that he and others did, but we owe him. I rated the book a 3 because it seemed dry. It probably wanted to be accurate and cover the situation factually. He accomplished it but I was so turned off with the greed on Wall Street, it probably affected my outlook. I appreciated his side. Great effort on his part.
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14 of 20 people found the following review helpful
on June 28, 2010
If you're looking for a book that details page by page - day by day the events building up to the global credit crisis and subsequent recession read this.

Say what you want about Paulson, he obviously has a head for dates and numbers. Unfortunately: literary skills - Not so much.

On The Brink can't seem to make up its mind whether it's an autobiography, political polemic or factual work. Ultimately the mish-mash comes out as an apologetic piece which seems more about Paulson trying to prove himself to critics. He even provides an exemplar of one of his 12+ hour days.

I have absolutely no doubt that this man worked his butt off during this difficult time but that's no excuse for writing a confusing non-fiction work which is impossible to discern between memoir and text-book.

Overall the most interesting parts are where Paulson discussing his interactions with the two presidential candidates during 2008, however the lack of any philosophising (usually you can't get people to stop once they start writing on the subject) or extrapolation past `what we did in response to this crisis' makes On the Brink an extremely dull read. Perhaps Paulson thought it would broaden the appeal of his work if he didn't get into too much discussion but personally I would prefer to read a work that I disagreed with then one that bored me to sleep.
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