The mythology of Treasury Secretary Hank Paulson got a helping hand recently from a spate of magazine cover stories unwilling to fundamentally criticize the man they present as our last best hope. The Great Man Theory may be out of favor in history departments, but not, alas, in the pages of the business press.
Furthermore, the timing of the stories, which came out during deliberations over the bailout plan—although two of the pieces apparently went to press too early to mention it—meant that they served as nice publicity for Paulson’s rescue bid. After all, how could we seriously doubt the judgment of that “steely-eyed treasury chief” staring from the cover of Fortune?
Or the dashing young football player poised to “tackle the mortgage mess” inside Newsweek:
Or the relaxed—notice the hands in pockets—but resolute former investment banker in the October Bloomberg Markets:
Each of these stories has a slightly different take on Paulson’s leadership style, but at base their takes are the same: This man may have critics, but woe to anyone who doubts his skills.
To support their claim to Paulson’s fitness for what has become a rather extraordinary job, the articles pointedly note that the man developed those skills at that bastion of finance Goldman Sachs—where Paulson enjoyed considerable success before choosing to dedicate his life to public service.
At the Treasury, Paulson is drawing in large part on the skills he honed during his 32 years in investment banking. Paulson’s signature style is to confront issues early, hold private meetings and build a consensus before announcing a deal, so that he’ll get the necessary backing, according to members of Congress and government staff who’ve worked with him.
We note that this observation doesn’t seem to have played out. At least not in recent weeks. From what we’ve read, not everyone who has worked with Paulson on the bailout would recognize this particular version of the Treasury secretary. Early intervention? No. Consensus? No. Necessary backing? Not at first.
And, in fact, these cover stories don’t even quite agree among themselves as to who Paulson is.
Fortune even points out that Paulson was “slow to acknowledge” economic trouble, although it softens the criticism by noting his “can-do spirit.” That spirit, we learn, “is valuable when tackling daunting problems, but is less helpful in spotting trouble on the horizon.” And since the piece is, after all, titled “Paulson to the Rescue” (or in the online version, “The Power of Paulson”), we shouldn’t be surprised that Fortune focuses more of Paulson’s can-do spirit than his limitations.
Newsweek, which calls Paulson “King Henry” on its cover, doesn’t so much present Paulson the smooth negotiator as it does Paulson the competent (if not always popular) man of action:
…Paulson has rankled some in Washington by conducting business like a Wall Street Master of the Universe: the marathon late nights and weekend meetings with a small group of people, followed by an unveiling of the result as a fait accompli.
But, and here is the key point, rankling or no rankling, Paulson is up to the task of saving us from disaster. Newsweek goes on to tell us:
In many ways, Paulson was the ideal person to deal with this mess. A 32-year veteran of Goldman, he helped take the venerable (and venerated) company public and served as CEO from 1998 to 2006, an era in which the firm prospered.
It was also an era in which Goldman helped bring on the credit crisis, but these cover stories are hardly the only ones to leave that important detail out.
In fact, this 2006 BusinessWeek cover story—which came out as Paulson first took off for Washington—does a better job of raising the right issues. Although this earlier cover story doesn’t foresee the current collapse, it does put Paulson in some context:
Think of Paulson as Mr. Risk. He’s one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.
This is a smart point. And the current pieces should have made it.
But the fundamental problem with these pieces is deeper than a missed observation or clashing versions of the same person. The underlying problem is that they are a species of the Great Man theory that is all too prominent in the business press. In these stories, Paulson is not just the institutional face of the credit crisis, he’s a kind of stand in for that crisis. Rather than scrutiny of the system, of which Paulson is undoubtedly a key part, it’s Paulson front and center.