When Edward C. Forst ’82 left Goldman Sachs this summer to become Harvard’s first executive vice president, it appeared he had left the finance world behind—until an old friend called.
“We had a fabulous three weeks with him,” University President Drew G. Faust in an interview Friday afternoon. “Then the secretary of the treasury called and said I need to draft him to come save the nation.”
Forst is helping Secretary of the Treasury Henry M. Paulson, his erstwhile Goldman colleague, draft the controversial $700-billion bailout plan that is currently being considered by Congress, Faust said.
Faust said that though Forst would be in Washington for weeks as a temporary consultant and “can’t exactly say when” he’ll return, the executive vice president is still plugged into events at Harvard.
“He’s still completely engaged here,” she said. “He calls me at 11 at night from the Treasury Department, and he doesn’t get any sleep.”
Still, Faust added, plans for potential administrative reorganization—such as whether to keep the vice president for finance position—may be on hold until the crisis abates.
“That decision has not been made yet and it may be postponed slightly,” she said, “because he’s saving the world.”
Forst declined to comment on his work in Washington, writing in an e-mail Saturday that he is “locked away for quite awhile and won’t be able to step out to speak live.”
Before coming to Harvard, Forst served as the global head of Goldman’s investment management division, joining the bank’s elite management company in 2004. He became a Goldman partner in 1998, Paulson’s first year leading the firm.
Paulson left Goldman in 2006 to become President Bush’s treasury secretary.
Paulson’s bailout plan, which seeks to raise confidence in the ailing pillars of the U.S. financial system—would give the federal government authority to buy up to $700 billion of difficult-to-sell securities.
The legislation gained key support over the weekend from lawmakers on both sides of the aisle and is now expected to be passed Monday by both houses of Congress.
The plan follows a slew of financial shocks in recent weeks, including the bankruptcy of Lehman Brothers, the government takeover of mortgage giants Fannie Mae and Freddie Mac, and most recently, the failure of Washington Mutual and its subsequent seizure by federal regulators, the largest bank failure in American history.
While the initial response to Paulson’s plan was favorable, and key lawmakers had signaled their support, it has taken flack from academic economists and the media in recent days. And despite support from Democrats in Congress, who have reached an agreement with Paulson about the general framework of the bailout, House Republicans have criticized the plan, saying that the legislation unfairly exposes taxpayers to billions of dollars of losses.
—Staff writer Clifford M. Marks can be reached at email@example.com.