In Paulson's book "On the Brink" -- a Bush-Sarkozy battle, Clint Eastwood advice, Reagan principles and worries over Sarah Palin's grasp of the crisis
By Steven Levingston
During his sleep-deprived campaign to save America from financial collapse, former Treasury Secretary Henry Paulson watched as former President George W. Bush beat back efforts by French President Nicolas Sarkozy to steal into the limelight, got advice from Clint Eastwood on how to handle House Speaker Nancy Pelosi, fretted over his betrayal of the Reagan principles, and worried that Sarah Palin did not grasp his program.
In his book, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," Paulson recounts Sarkozy's visit to Camp David in October 2008 where the French president pressed for a G-8 style summit in New York to address financial reform. Sarkozy used all of his charm to sell Bush hard on his plan, arguing that the White House would demonstrate its leadership by hosting the summit.
Bush, apparently, was being dragged into a battle between France and Britain for leadership of reform in Europe, a role Sarkozy wanted to claim for himself over British Prime Minister Gordon Brown. Sarkozy sought the summit as a way to put his stamp on certain issues such as mark-to-market accounting and the role of rating agencies.
"The White House suspected that Sarkozy was looking to pull off a publicity coup on our home turf," Paulson writes in the book, which is to be released next week. The Washington Post bought a copy at a bookstore in Washington.
Bush agreed that a summit was necessary but favored a larger global group on the scale of the G-20 including China and India.
"Sarkozy dominated the hour-long meeting ... but he must have left frustrated," Paulson writes. "He'd won agreement on a meeting - which we had already decided to hold - but little beyond that."
Toward the end of his tenure, Paulson attended a White House reception before the Kennedy Center Honors at which Clint Eastwood would speak on honoree Morgan Freeman. Eastwood happened to see Paulson and Pelosi in deep conversation. As Paulson told Pelosi he may have to notify Congress he needed the last tranche of the TARP funds, Pelosi grabbed his hand and urged him not to do it.
When Eastwood walked up, he said to Paulson: "I don't know what she's talking to you about, but she's stronger than you, Mr. Treasury Secretary. I suggest you do whatever she wants."
Although swamped by the crisis, Paulson honored a promise to Nancy Reagan and broke away from Washington to speak at the Ronald Reagan Presidential Library in California. He checked into an inn nearby and spent a sleepless night amid Reagan White House photos and images from his Santa Barbara ranch. He tossed and turned thinking about the irony of his situation - he was a free-market believer like Reagan but he would be a treasury secretary forever remembered for government intervention and bank bailouts.
"Of all the rough nights I'd endured throughout the crisis, this one was by far the worst," Paulson writes. "I lay awake tormented by self-doubt and second guessing."
During the presidential campaign Paulson phoned Sen. John McCain to discuss the planned takeover of Fannie Mae and Freddie Mac. Paulson hadn't met Palin but quickly sensed that her selection as the ticket's running mate had revitalized McCain. The senator was eager to introduce Palin and put her on the phone. But, Paulson writes, "I'm ... not sure she grasped the full dimensions of the situation I had sketched out."
He also had a poor personal first impression of her. "Right away she started calling me Hank," he writes. "Now, everyone calls me Hank. My assistant calls me Hank. Everyone on my staff, from top to bottom, calls me Hank. It's what I like. But for some reason, the way she said it over the phone like that, even though we'd never met, rubbed me the wrong way."
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