Une histoire tordue entre Havard, Goldman Sachs et Paulson

Extrait de: John Paulson, Goldman Sachs, and Harvard: The conclusion of the Abacus Story, EconoMonitor, Author: L. Randall Wray, June 8th, 2015

All: I’ve been quiet for a while; I’ll explain why later. However the following story is just too good to pass up. Enjoy!

Subject: Jeff Sachs on The Harvard IKB School of Engineering

AbacusThe good people of Dusseldorf, Germany, and specifically the IKB Bank, which specializes in loans to small and medium-size businesses, has kindly endowed Harvard University’s engineering school with a gift of $400m. Harvard President Faust announced the endowment on June the most generous in the University’s history. Strangely, though, the Harvard Engineering School was renamed after hedge-fund manager John A. Paulson, not IKB, and thereby hangs a tale.

 You see, the gift by Dusseldorf was not made in its own name. In fact, the money en route to Harvard was taken from IKB through an infamous swindle. Back in early 2007, before the 2008 financial crash, hedge fund manager John Paulson approached Goldman Sachs with the idea of ripping off unknowing investors to the tune of $1 billion.

In essence, Paulson would assemble a $1 billion portfolio of toxic assets (known as Abacus) that Goldman Sachs would market to its unsuspecting clients.

Paulson would bet against the portfolio, so that the investors’ $1 billion loss would be Paulson’s gain. Goldman would pocket some fees for its service in this treachery against its own clients.

As planned, the $1 billion portfolio of securities collapsed in value soon after IKB (with its $150 million purchase) and other hapless investors bought in. Paulson walked away with $1 billion.

·         Goldman got paid its fees.

·         IKB lost its investment, collapsed, and was bailed out by the German taxpayers.

When the Securities and Exchange Commission got wind of this duplicity, it charged Goldman Sachs with financial fraud, in a complaint that details the timing and particulars.

A few months later, Goldman settled with the SEC by paying a fine of $550 million. 

Paulson, strangely enough, was not charged by the SEC, and walked away with the ill-begotten $1 billion. In a Wall Street community that prizes money far above honesty, Paulson was hailed for his genius in the deal.

He was the toast of the town. Goldman’s CEO Lloyd Blankfein, for his part, was so satisfied following the onset of the financial meltdown that he boasted that he was doing “God’s work.”

In giving away the money of the German people, Paulson did not display any evident acknowledgement of the true nature of his ill-gotten gains.

Nor did Harvard make a fine point of the matter. The Harvard Business School Dean described Paulson as “the epitome of a visionary leader.”

The Romans used to say of ill-gotten lucre, *”pecunia non olet”*
(“money doesn’t stink”).

Note that Paulson only turned over to Harvard less than half of his ill-gotten windfall from the Abacus fraud, $400 million of $1 billion. He has pocketed the rest, plus billions dollars more that one reasonably suspects have a similar origin. The whole sordid experience reminds one of a Soviet-era story.

A Russian babushka (grandmother) is praying in a church for 10 rubles for a winter coat. The Soviet commissar passing by the church is disgusted, and hands the women 5 rubles to go buy a tattered winter coat. Later he is surprised to see her back at the church praying once again. He moves closer to listen in on her prayers. “Thank you, God, for sending the 10  rubles, but next time don’t send it through the Communists; they kept 5.”

We can say the same to the German people. Thank you for endowing Harvard’s Engineering School. But next time don’t send it through John Paulson; he kept $600 million of it.

The least the rest of us can do is call the school by its rightful name: the Harvard IKB School of  Engineering.

Jeff Sachs Articles  www.jeffsachs.org by Sonia Sachs
61 Claremont Ave New York, NY 10027 USA

Extrait de: Harvard University: Hedge fund billionaire John Paulson gives Ivy League college $400m - its biggest ever gift, The Independent, Tuesday 09 2015

Harvard University has received its biggest gift in the school history - a $400m donation from Wall Street hedge fund billionaire John Paulson

The Ivy League institution announced on Wednesday that the gift from Mr Paulson, an alumni of  its business school, will support the School of Engineering and Applied Sciences, which has led technology breakthroughs and is planning to expand.

Mr Paulson, 59, said it promised to become “the next major center of innovation”. Officials said the science school will be renamed the Harvard John A Paulson School of Engineering and Applied Sciences

The Associated Press said Mr Paulson is 1980 graduate of Harvard Business School and is founder and president of investment management firm Paulson & Co.

He started the company with $2m in 1994, and it now manages more than $19bn. Mr Paulson built his fortune in part by betting against subprime mortgage bonds as the US housing market veered toward collapse in 2007. 

“John Paulson's extraordinary gift will enable the growth and ensure the strength of engineering and applied sciences at Harvard for the benefit of generations to come,” Drew Gilpin Faust, president of Harvard, said in a statement.

The science and engineering school of the college, located in Cambridge, Massachusetts, has grown rapidly in recent years, and its laboratories have led to advancements such as a swarm of self-organising robots, an implantable cancer vaccine and a robot that can assemble itself from a flat sheet.

Harvard received the gift amid a $6.5bn fundraising campaign that started in 2013. Last year, the university's School of Public Health received a $350m gift that was the largest in the school’s 379-year history at the time.