Correction to This Article
In some editions, the headline on this article says that Robert Steel, as a Treasury undersecretary, holds the No. 2 position in the department. The No. 2 position is deputy secretary.

In Times of Crisis, Treasury's No. 2 Plays Crucial Role

Treasury Secretary Henry M. Paulson Jr., left, and Undersecretary Robert Steel have a 30-year-old, Batman-and-Robin-like relationship.
Treasury Secretary Henry M. Paulson Jr., left, and Undersecretary Robert Steel have a 30-year-old, Batman-and-Robin-like relationship. (By Ron Edmonds -- Associated Press)
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By David Cho
Washington Post Staff Writer
Tuesday, February 12, 2008

When Treasury Secretary Henry M. Paulson Jr. left the top job at Goldman Sachs to come to Washington, he took only one colleague, his former lieutenant, Robert Steel.

Steel still plays the same role. Call him the fixer.

When Wall Street banks recently had a tense tete-a-tete with New York's top insurance regulator, they turned to Steel to patch-up the relationship.

When Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., had an idea to freeze rates for distressed homeowners with subprime mortgages, she contacted Treasury through Steel, who worked behind the scenes to turn the idea into a major initiative for the Bush administration.

And when Rep. Barney Frank, the chairman of the House Financial Services Committee, needs to get the attention of Treasury, he gets Steel on the phone.

In just a year and four months since his appointment as undersecretary for domestic finance, Steel has quickly become known as Treasury's go-to guy on Wall Street's credit woes and the housing downturn. Among Treasury's senior staff, he has the unique advantage of sharing a close, Batman-and-Robin-like relationship with Paulson, fashioned over nearly 30 years together at Goldman Sachs. After Paulson was anointed the investment bank's chief executive in 1999, Steel became his vice chairman in 2001.

"I've known the secretary for a long time," Steel said during an interview last week at a financial conference in Las Vegas. "We can communicate comfortably and quickly. . . . Hank and I are in each other's offices five times every day. It's like a running conversation."

Paulson and Steel have been the architects of several high-profile plans announced by the Bush administration. Their actions may go a long way this year in determining the severity of a widely expected recession.

"The advantage of bringing Bob was I had a history of working with him," Paulson said. "He's very good at smoothing over conflicts; and when there's tensions, bringing the temperature down."

Steel's management skills and can-do approach put him on the short list of candidates when Citigroup and Merrill Lynch were looking for new chief executives last year, said several people familiar with the matter. But he refused to interview, out of loyalty to Paulson.

Steel said he is comfortable, for now, in his role as Paulson's No. 2. "I'm a team player," he said. "For me it's more important for what team I'm on than what position I have."

Steel is a Republican and, before coming to Treasury, hosted fundraisers in 2006 at his Colorado home for John McCain. Steel does not consider himself an ideologue. One of his closest allies since he came to Washington has been Frank, a Democrat from Massachusetts.

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