by Calculated Risk on 6/23/2006 05:05:00 PM

Earlier this year, Daniel Gross wrote for Slate: Why no Wall Street CEO wants to be the new Treasury secretary.

John Snow will have a replacement, and he may very well come from the corporate world. But if it's an A-list Wall Street CEO, I'll buy a copy of Dow 36,000 and eat the first chapter.

After the nomination of Paulson, Gross wrote: I made a stupid promise. And now I have to keep it.

"... to the delight of Slate's New York bureau, a luncheon of Dow 36,000 and field greens, drizzled (well, drowned) with balsamic vinaigrette, was served. See the video"

But why did an 'A-list Wall Street CEO' take the job? The Economist claims: Riddle Solved

When his appointment was announced, Mr Paulson explained that he was motivated by the “honour” of service. Doubtless he was...
...
It turns out that for someone, like Mr Paulson, who has lots of shares in one company, becoming treasury secretary comes with a whopper of a tax benefit. ... he may have wanted to diversify his portfolio a little. ... Becoming treasury secretary, however, allows Mr Paulson to sell his shares without penalty or embarrassment. Sale is required by law: no loss of faith there. And his new job is covered by Section 2634 of the Federal Ethics Laws ... Mr Paulson is able to exchange his holdings in Goldman for various widely diversified investments [without paying any current taxes].

Mr Paulson does not shed his tax obligations entirely—they are carried over to his new investments—but he does not have to realise any gains and can thus postpone payment until he does. He can, in short, diversify without cost ...

I'm sure Mr. Paulson took the job for other reasons, but for someone with so much of their net worth in one company stock, this is a nice method to diversify your holdings.