Since the SEC civil fraud suit against Goldman Sachs laid bare the ugly details of the transactions that allowed John Paulson to make billions shorting the housing market, parents at the Spence School, the Upper East Side all-girls day school attended by at least one of Paulson's daughters, have taken to UrbanBaby.com to vigorously debate Paulson's actions and his recent election to the school board. "I don't believe that the way he structured his deal was illegal, but it was certainly immoral and displayed all the instincts of a social parasite," wrote one poster. "I wonder how everybody feels to have him on the board of Spence." Wrote another:
if spence were smart they would get rid of him asap. it makes them look really bad to have him on their board.
To be sure, like most New York private schools, Spence would prefer not to have for board members individuals whose ethics are being questioned in the international media. But the SEC has gone out of their way to acknowledge that Paulson wasn't responsible for any wrongdoing, and the school has an endowment of around $100 million to manage. They wouldn't really kick Paulson off the board, would they? Actually, they might, sources tell Daily Intel.
"It's payback time for Paulson," one fellow hedge-fund manager and Spence parent gloated via text, suggesting that the Queens native turned sudden billionaire wasn't too popular among the old-money denizens of the school, anyway.
A spokesman for Mr. Paulson indicated to the Journal that he had no intention of stepping down. But he may not have a choice.
“I understand the board will ask him to step down," one parent who spoke with two of the school's board members yesterday told Daily Intel. "We just simply don't have a culture of allowing board members with this much controversial publicity in a leadership role."
Spence has had problems with other high-profile Wall Streeters before. Last year, Moody's downgraded their debt, citing their disapproval of the fact that the school kept 25 percent of the endowment's money in one of Stanley Druckenmiller’s hedge funds. His wife, Fiona, was a member of the board. Members of the board and the school's administration did not return a call for comment. Armel Leslie, a spokesman for Paulson, says: "Mr. Paulson has not heard of any concerns from the Spence Board and does not expect to."
Related: John Paulson’s Newest Critics: The Mommy Set [Metropolis/WSJ]