Friday, September 19, 2008

Former councilman working on Wall Street crisis

Steve Shafran is among Treasury secretary’s top financial advisors


By GREG STAHL
Express Staff Writer

Former Ketchum City Councilman Steve Shafran is now serving as one of the top advisors to Treasury Secretary Henry Paulson. Photo by Mountain Express

Two years ago Steve Shafran was helping draft Ketchum's downtown master plan. This week he's working to help shore up the nation's stumbling economy.

As a member of the Ketchum City Council, Shafran worked for two years to help pull the resort city through a dynamic period of change. Now he is hard at work in New York City and Washington, D.C., as one of the top advisors to Treasury Secretary Henry Paulson.

Shafran is one of four Goldman Sachs Group Inc. alumni on whom Paulson is relying during this week's global financial meltdown. Paulson himself once headed the group, which is among those that have weathered the market turmoil better than most of its Wall Street brethren.

Shafran left the Ketchum City Council at the expiration of his term in December 2007. He was appointed two years earlier by Mayor Randy Hall.

Contacted by telephone Thursday morning, Shafran declined to comment on his current work or the state of U.S. financial affairs. He instead referred to a Sept. 17 article in the Wall Street Journal. Titled "Amid Turmoil, Tireless Team Of Advisers Backed Paulson," the article outlines Paulson's team and indicates how hard its members are working.

"As Mr. Paulson huddled in New York this weekend with the Federal Reserve and Wall Street titans, at his side were his chief of staff, Jim Wilkinson, along with two former Goldman staffers: Dan Jester, an expert in financial institutions, and Steve Shafran, who focused on corporate restructuring at Goldman before retiring from the firm six years ago."

The newspaper reported that Paulson's advisors, who include more than his former Goldman colleagues, have been working on a grueling schedule to find ways to respond to the mounting crisis.

Last weekend, Jester and Shafran occupied an office at the Federal Reserve Bank of New York, working closely with Paulson to find a private-sector solution to the financial problems plaguing the U.S. financial sector, the Journal reported.

The woes of Wall Street are a far cry from the Ketchum Downtown Master Plan, Fourth Street Heritage Corridor, Ketchum Urban Renewal Agency and Ketchum Community Development Corp., some of the local projects Shafran helped to get off the ground.

"He made a huge impact on the way we do business and the way we process ideas on the City Council," Hall said. "It was great having him there working for the city."

Hall said meeting Shafran was one of the high points of his life.

"He's an incredibly gifted human being," he said. "I'm incredibly grateful for the work he did for the city of Ketchum. When I read the paper on Wednesday I had this feeling of being very proud of Steve."

Hall said he regularly communicates with Shafran. Despite the many tasks on which Shafran is working, Hall said the high-level financier is generous with his time.

"I feel somewhat safe knowing Steve is in Washington helping to save this country," Hall said. "We've got a local boy pulling for the country in Washington, D.C., and I can't think of a better person to be in that position."

It can't be overlooked, however, that Shafran's return to the financial world might have been different had tragedy not struck a mere month after his appointment to the Ketchum City Council. He and his wife, Janet, moved to Ketchum to retire and raise their children, but on Jan. 24, 2006, Janet Shafran was killed in a plane crash in Carlsbad, Calif.

Shafran said in an earlier interview that involvement with the Ketchum City Council was one of the things that helped him work through the loss.

"Council was the first thing in my life that I hadn't previously shared with Janet," he said. "The experience was very therapeutic. I needed something to keep myself occupied. As the year went on I enjoyed having the occupation. It never occurred to me to resign, and as the year went on it became less likely that I'd resign."

An unusual twist to Shafran's time in Ketchum politics was his fall 2007 loan to the Ketchum Urban Renewal Agency of $1 million to make the agency solvent before it began accumulating a projected $20 million over the next 23 years.

Shafran said much of what he and the City Council accomplished in two years had more to do with timing than the personalities involved.

"I think a lot of those things were kind of really in the background and ready to come forward," he said. "To me, the sun, the moon and the stars were lined up. It was ready to happen. We all got to roll up our sleeves and get to work. The issue was getting it done, not whether or not we were going to try to get it done."

In a June 2007 interview, Shafran admitted that he brought a new perspective to the city of Ketchum. Despite his role as owner of an investment advisory company in China and a former Goldman partner, it was not his ability to read a ledger that worked in local politics.

"The most important thing I came here with was a perspective that the council ought to work as a team," he said. "The bickering and squabbling that has characterized city government here—it's a silly way to run an army. My internal background with working with people was more important than owning companies in China.

"It's that experience, which is very general, that has proved useful."

Now in a much larger arena, Shafran is putting experience to use. This time, the nation—and the world—are watching.




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