I am actually a huge fan of Hank Paulsen. He was a strong SecTreas before the meltdown and he got a little caught in the headlights at the end, knowing that he was out of a job in a couple of weeks. He was put in the almost impossible position of trying to explain to the American taxpayers why $878 Billion dollars were going to go to bail out banks and insurance companies that had gambled the USA into a financial meltdown, WITHOUT any consequences because Congress, not Treasury, felt the need to knee-jerk something in place as huge Financial Institutions like Lehman were crumbling around their ankles.
When Paulson left the top job at Goldman Sachs to become Treasury Secretary in 2006, his big concern was whether he’d have an impact. He ended up almost single-handedly running the country’s economic policy for the last year of the Bush Administration. Impact? You bet. Positive? Not yet. The three main gripes against Paulson are that he was late to the party in battling the financial crisis, letting Lehman Brothers fail was a big mistake and the big bailout bill he pushed through Congress has been a wasteful mess. Only, because there were no strings attached. Not Paulsen’s problem; Congress’s problem. But, nonetheless, he is stuck with it. But, I only put him at 18th. There are far more venal culprits to come.
Lew Ranieri: #17.
Meet the father of mortgage-backed bonds. In the late 1970s, the college dropout and Salomon trader coined the term securitization to name a tidy bit of financial alchemy in which home loans were packaged together by Wall Street firms and sold to institutional investors. In 1984 Ranieri boasted that his mortgage-trading desk “made more money than all the rest of Wall Street combined.” The good times rolled: as homeownership exploded in the early ’00s, the mortgage-bond business inflated Wall Street’s bottom line. So the firms placed even bigger bets on these securities. But when subprime borrowers started missing payments, the mortgage market stalled and bond prices collapsed. Investment banks, overexposed to the toxic assets, closed their doors. Investors lost fortunes. And here we are today. Thanks, Lew.
Marion and Herb Sandler
In the early 1980s, the Sandlers’ World Savings Bank became the first to sell a tricky home loan called the option ARM. And they pushed the mortgage, which offered several ways to back-load your loan and thereby reduce your early payments, with increasing zeal and misleading advertisements over the next two decades. The couple pocketed $2.3 billion when they sold their bank to Wachovia in 2006. But losses on World Savings’ loan portfolio led to the implosion of Wachovia, which was sold under duress late last year to Wells Fargo. And, again … I have no malice for the Sandlers … this is America with a capital A and everyone should be allowed to seek their dream and drive it to the big bank in the sky. But, just once, can we ask “Does this make sense?”, before we open the gates?