Paulson issues leadership advice

Former Treasury Secretary Henry Paulson discussed his role in responding to the financial crisis of 2008 at a talk Tuesday.
Former Treasury Secretary Henry Paulson discussed his role in responding to the financial crisis of 2008 at a talk Tuesday. Photo by Zeenat Mansoor.

Henry Paulson Jr. reflected on his experiences as U.S. Treasury Secretary and stressed the need for leaders to form strong relationships with colleagues at a Tuesday talk at Sage Hall.

Paulson, who served in the administration of George W. Bush ’68 from 2006-’08, told a crowd of more than 100 people that effective leaders must surround themselves with team members that complement and trust each other. He said his relationships with members of the administration helped him facilitate the government’s response to the financial crisis, the magnitude of which he said exceeded his expectations.

“Leadership is working on common ground and listening to other people,” Paulson said. “A relationship is not just shaking hands, or having dinner together, but working together to get things done.”

He stressed the importance of working with people with “complementary skill sets” who can compensate for individual weaknesses, adding that the defining qualities of leadership are “insatiable” intellectual curiosity, self-awareness, decisiveness and care for people.

In his time as treasury secretary, Paulson said a central challenge was collaborating with a president who fared poorly on public opinion polls. Still, he added that the opportunity to work with Bush for a year before the financial crisis gave him an advantage in dealing with its consequences. In the midst of the financial crisis, Bush appointed Paulson to form a group of experts and consult with members of Congress on reforms to rescue the financial system from the brink of collapse.

Paulson added that he expressed concern that the financial system was vulnerable in the years leading up to the crisis, but he “underestimated the extent of the whole credit bubble.”

He said there was no perfect solution available to mitigate the crisis. Still, he said he could have better communicated to the public the philosophy and mechanisms behind the Troubled Asset Relief Program that injected credit into the financial system.

“I never explained to the American people that the bank rescuers were for the American people, not for the banks,” he said.

He said his experience and training as the CEO of investment bank Goldman Sachs gave him the economic expertise necessary for the office of treasury secretary, but the political element of the job entailed the added challenge of persuading his colleagues and the public about the merits of his ideas.

He added that although he has always prided himself on maintaining his stances in the face of criticism, he said that some situations — such as a financial crisis — require leaders to be flexible and open to change.

“You show me a leader that doesn’t change his mind, and I think you look at a poor leader,” he said.

Three students interviewed after the talk said the discussion was informative and insightful, though one said he wished Paulson had focused more on the ethical consequences of his decisions. Molly Ma ’13 said she particularly enjoyed Paulson’s take on the importance of establishing complementary relationships, and Ning Zhang SOM ’13 said Paulson “seemed humble and straightforward.”

Tuesday’s discussion with Paulson was part of a series of conversations on leadership sponsored by the Jackson Institute for Global Affairs.

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