Wall Street Veteran Helped New York Avert Bankruptcy
By James R. Hagerty, May 4, 2022, WSJ
When NYC was on the brink of bankruptcy in 1975, George D. Gould
got a phone call at 1 a.m. from Mayor Abraham Beame, who invited
the financier to a breakfast a few hours later. The meeting
resulted in Mr. Gould’s appointment as one of the original board
members of Municipal Assistance Corp., or MAC, which monitored the
city’s spending and issued bonds to keep it solvent. Mr. Gould
briefly served as chairman of MAC in 1979.
A graduate of the Phillips Academy, Yale and Harvard, Mr. Gould
mixed a Wall Street career with a heavy dose of public-service
jobs involving financial messes. Part of his motivation, he said,
was to defend New York amid “unending abuse” from people living in
other parts of the country who were eager to kick the city while
it was down. That abuse “raised my competitive hackles,” he said.
New York Gov. Hugh Carey, a Democrat, appointed Mr. Gould in 1976
to serve in another role, chairman of the state’s Housing Finance
Agency. In 1985, the Reagan administration appointed him as an
undersecretary of the Treasury. In that job, he dealt with failing
savings-and-loan associations, or S&Ls, and with the aftermath of
the October 1987 stock-market crash.
Mr. Gould died April 26 at his home in Palm Beach, Fla. He was 94.
His role in New York’s financial crisis was educational, Mr. Gould
told the New York Times in 1979: “It has made me realize how many
erroneous, snap opinions I held and how unsimple the solutions are.
It isn’t quite as easy as it looked when I was having a drink with
a few friends and said, ‘Gee, they really ought to get with it.’”
James A. Baker III, who as Treasury Secretary brought Mr. Gould
into the Reagan administration, called him “a damn fine public
servant.” They went on quail-hunting trips in Texas and shared
many friends. At the Hill School in Pottstown, Pa., Mr. Baker’s
senior-prom date was Julie Echols. She later married Mr. Gould.
George Dana Gould was born May 22, 1927, in Boston. His father,
Ernest Wellington Gould, invested in real estate and commercial
ventures. His mother, the former Lillian Dana Sumner, was a
descendant of U.S. Sen. Charles Sumner, who represented Massachusetts
in the Civil War era. She died when George was around 5 years old,
and he went to live with two aunts.
After graduating from Yale with a degree in economics, Mr. Gould
told his father he might take time off for skiing. His father
informed him that becoming a ski bum wasn’t an option. Mr. Gould
enrolled at Harvard Business School and received an M.B.A. degree
in 1955. He was hired to help manage the family fortune of
Jeremiah Milbank, a philanthropist and Republican stalwart who
had been close to Herbert Hoover. At the Milbank family office,
he met Dan Lufkin. In 1959, Mr. Lufkin joined William Donaldson
and Richard Jenrette to form the investment-banking firm Donaldson,
Lufkin & Jenrette Inc., known as DLJ. About a year later, Mr. Gould
joined DLJ. He built up the firm’s fund-management business and
later headed the securities arm. Mr. Jenrette told the New York
Times that Mr. Gould was “a great communicator—explaining things,
After leaving DLJ in 1976, Gould headed Madison Fund Inc., which
operated a closed-end investment fund. In 1983, Madison Fund began
transforming itself into an operating company and invested in oil
and gas. When Gould arrived at the Treasury, the S&L crisis was
festering. Soaring interest rates in the late 1970s and early 80s
had caused huge losses for S&Ls and left many insolvent. Regulators
hoped insolvent S&Ls could grow their way out of trouble, avoiding
the need for a bailout. S&Ls, traditionally focused on home mortgages,
were allowed to make riskier loans, many of which proved disastrous.
The S&L crisis presented a dilemma for the Reagan administration.
Allowing depositors to lose their savings wasn’t a politically
acceptable option, but the administration also wanted to avoid a
bailout that might contradict its free-market message.
In early 1987, Gould told The Wall Street Journal that it would be
foolish “to write a big fat government check” to keep S&Ls operating
without a clearer idea of the quality of their management and extent
of their losses. In August 1988, Gould dismissed estimates that
S&Ls might need a $100 billion infusion and said the number might
be closer to $30 billion. A year later, the new George H.W. Bush
administration found that the problem was much worse. The estimated
cost to taxpayers ballooned to $124 billion. Gould told the American
Banker that S&L regulators, in estimating the damage, had given the
Reagan administration “a bum number.”
After he left the Treasury, Gould was vice chairman of Klingenstein
Fields, a fund manager. In 1990, a court appointed him to oversee
liquidation of assets of Drexel Burnham Lambert Group. His compensation
was set at $37,500 a month. Gould was back in the news in 2003 as a
director of Freddie Mac, a government-backed provider of home-mortgage
funding, and head of the board’s corporate-governance committee. He and
other directors ousted top Freddie Mac executives amid an accounting scandal.
Julie Echols Gould died in 1983. Two other marriages ended in divorce.
In 2006, he married Darcy Mead Damgard. She survives him, along with a
son, George Gould, and two grandchildren.
A familiar figure on tennis courts in the Hamptons and Palm Beach,
Gould played the game into his early 90s. He organized bird-hunting
trips in Scotland and devoured biographies and history books. He made
a point of reading everything by Barbara W. Tuchman. Late in life, he
permitted himself to add thrillers to his reading list.