Here’s more proof that the people who probably should have known how they were making all that housing bubble money never did—even those who personally made tens of millions off of it. The Business blog at The Atlantic notes a quote Hank Paulson, former Goldman Sachs CEO and Treasury Secretary, gave Newsweek: “I didn’t understand the retail market; I just wasn’t close to it.”
Derek Thompson at The Atlantic writes,
I’d like to offer a bit of analysis, but all I’ve got is bewilderment. The reason I find the revolving door between Wall St. and Washington somewhat acceptable is that I think it’s important that those who govern Wall Street understand it. But Paulson, by his own admission, didn’t really. Think about this: A guy whose $46 million compensation package was made possible by leaving during Goldman’s mortgage-security boom “was not paying much attention” to the mortgage-security boom! I don’t know if Paulson is fibbing, or if mortgage-securities were such a specialized and esoteric money machine that basically nobody understood what was going on, but either way, this seems devastating.
We’ll admit, before we read that Wired article we thought a quant was a Star Trek term. We still don’t know how mortgage-backed securities really work. But we didn’t make close to $50 million on them, either.