| Paulson to divest Goldman
Sachs holdings
June 22, 2006
Business Week
Spokeswoman Dana Perino said Paulson would sell all his holdings in the firm, including stock options he holds that have not yet vested. She said both Paulson and his wife, Wendy, would sell any assets that would create conflicts of interest. Paulson was selected last month by President Bush to succeed John Snow as Treasury secretary in a continuing effort to jump-start the administration's stalled second-term agenda. As the head of one of Wall Street's premier investment houses, Paulson was seen as someone who could be a more effective salesman than Snow for Bush's policies and also serve as a more experienced liaison with Wall Street. Paulson, who worked at Goldman Sachs for 32 years, owns 3.23 million shares of stock, which could be worth more than $480 million at current value. Paulson's net worth is estimated to be above $700 million. The extent of Paulson's wealth was illustrated by the financial disclosure filing he made as part of his nomination process. The filing, released Thursday by the Office of Government Ethics, included a 242-page appendix to list all his holdings. On the disclosure form, Paulson said he had earned $35.06 million in salary from Goldman Sachs Group, Inc., last year, an amount that included cash and stock options. While he has said he will remain chief executive of Goldman Sachs until he is confirmed by the Senate, company spokesman Peter Rose said Thursday that Paulson "had taken himself out of the day-to-day running of the firm to prepare for his confirmation." Senate Finance Committee Chairman Chuck Grassley, R-Iowa, is aiming to hold Paulson's nomination hearing on Tuesday as long as the review of paperwork continues to move ahead, a spokeswoman said Thursday. Paulson's nomination in not expected to run into major roadblocks. Grassley has said he hopes the nomination will be approved by the full Senate by the July 4th congressional recess. In the disclosure filing, which gives the value of assets in broad ranges, Paulson's largest holding was listed as more than $50 million in a brokerage account tied to Goldman Sachs. He has the option of taking advantage of a tax provision that allows individuals who must sell their investments to conform with federal conflict-of-interest rules to defer paying capital gains taxes on the profits by reinvesting the proceeds in government securities, such as bonds. Perino said she had no information on how Paulson planned to restructure his holdings. Snow, who became Treasury secretary in 2003, ended up being embarrassed when his financial adviser invested $10.87 million for Snow not in Treasury securities, which are allowed, but in the stock of some of the biggest players in the mortgage market, including Fannie Mae and Freddie Mac, which the administration is trying to bring under tighter government regulation. When the holdings were discovered during a periodic review, Snow sold the stock, suffering a loss of $478,000. Paul O'Neill, Bush's first Treasury secretary, created controversy when he first refused to sell nearly $100 million in stock in Alcoa, Inc., the company he headed before joining the administration. He said he would recuse himself from any decisions affecting Alcoa. However, after his decision sparked criticism, O'Neill relented and sold the Alcoa stock in mid-2001.
AP Economics Writer Jeannine Aversa javersa@ap.org contributed to this report.
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