George Gould, helped NYC solve financial crisis

Banker also was Treasury official under Reagan

George Gould, the former chairman of Donaldson, Lufkin & Jenrette who helped New York City solve its financial crisis in the 1970s and served as U.S. Treasury undersecretary in President Ronald Reagan’s administration during the 1980s, has died. He was 94.

He died on April 26 at his home in Palm Beach, Fla., according to a death notice placed by Quattlebaum Funeral, Cremation and Event Center.

The Harvard Business School graduate was tapped to work with Treasury Secretary James A. Baker III, a friend who was later appointed secretary of state by President George H.W. Bush. While Baker focused on international issues, Gould dealt with domestic financial affairs such as the 1987 stock-market crash, the bailout of savings-and-loan institutions and the raising of

America’s debt ceiling. He also directed the government’s unsuccessful bid in Congress to let commercial banks underwrite securities years before the repeal of parts of the Glass-Steagall Act of 1933, which effectively separated commercial from investment banking.

Gould served as Treasury undersecretary for domestic finance, the department’s No. 3 official, from 1985 to 1988 in Reagan’s second administration. He previously worked at DLJ from 1961 to 1976, founding the New York-based firm’s investment-management arm, which later became Alliance Capital Management. DLJ was acquired by Credit Suisse in 2000.

“George took the investment management division from the $200 million level to the $800 million level in three years,” Richard Jenrette, one of DLJ’s founders, said in a 1985 interview with the New York Times. Jenrette said Gould was a “great communicator, explaining things, selling ideas.” Jenrette died in 2018.

While serving Reagan,

Gould warned of a default in 1987 unless the debt ceiling was increased to allow the government to meet its obligations and continue issuing bonds. “The consequences of not having a debt ceiling increase on that date would be incomprehensible,” Gould said, according to a 1987 report by the Associated Press.

His warning was a harbinger of later political standoffs. In the mid-1990s, the government under President Bill Clinton shut down as Republicans demanded an end to rising national debt. Another debt ceiling crisis occurred in 2011, rattling financial markets and prompting Standard & Poor’s to issue the first-ever downgrade of the U.S. government’s credit rating.

Described by Fortune magazine in 1986 as a “banker with a breezy manner and a knack for fixing financial problems,” Gould led the government’s efforts to recapitalize the insolvent Federal Savings and Loan Insurance Corp. The insurer of deposits in savings institutions was reeling as U.S. thrifts failed in large numbers. Gould pressed for the industry to pay for the bailout before asking taxpayers to cover the cost.

He also helped form consensus on dealing with the 1987 stock-market crash, along with Baker, Federal Reserve Chairman Alan Greenspan and Robert Zoellick, an assistant to Gould at the time and later a president of the World Bank.

“We all agreed that it was important to inject huge amounts of liquidity into the system,” Baker said in “Work Hard, Study … and Keep Out of Politics!”, a 2006 book he cowrote with author Steve Fiffer.

George Dana Gould was born on May 22, 1927, in Boston. He earned a bachelor’s degree in economics from Yale University in 1951 and a master’s in business administration from Harvard Business School. He then joined Jeremiah Milbank Investments, where he worked in personal and philanthropic money management from 1955 to 1961.

After his career at DLJ, Gould was chairman and chief executive officer of Madison Resources Inc., the successor entity to the Madison Fund, a closed-end investment vehicle, according to a 1985 article in the New York Times. He was also a general partner at Wertheim & Co., a New Yorkbased investment bank, and vice chairman of Klingenstein Fields & Co., a New York-based asset management firm serving wealthy families.

In the late 1970s, Gould ran the finance committee of the Municipal Assistance Corp., helping Lazard Freres & Co. partner Felix Rohatyn oversee New York City’s refinancing efforts to dig out of its financial crisis. He succeeded Rohatyn as MAC chairman and went on to clean up the balance sheets of several other agencies, including the New York State Housing Finance Agency and the New York State Dormitory Authority.

Gould’s first wife, the former Julie Echols, died in 1983. In 1985, he married Jane Mack, a fund manager at DLJ’s Alliance Capital unit, where she ran a $1 billion portfolio, according to the New York Times. He was married for the past 16 years to the former Darcy Mead, according to the death notice.