The Best Goldman Apology Yet

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So you can see why Goldman alums sometimes don’t do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it’s hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective. You might say that no Goldman is an island.

via Will Everyone Please Shut Up About Goldman Sachs? | The Big Money.

And the winner of this month’s Most Retarded Horses__t Written In Defense of Goldman Sachs award goes to… Heidi Moore at Big Money! Come on down, Heidi!

This stuff is just getting funnier and funnier. Now that both Michael Lewis and Joe Hagan at New York have piled on and hammered the “magical” Wall Street bank’s reputation, the tearful, wounded apologies on the bank’s behalf are trickling in with some more urgency, especially now that, as Moore puts it, the bank faces the specter of “disastrously populist” hearings in the Senate for (and Moore left out this part) selling crap mortgages while shorting them at the same time.

This latest effort by Moore over at the Slate-run “Big Money” column is absolutely hilarious. She manages to write a fairly lengthy three-page article defending Goldman without addressing a single one of the main criticisms recently leveled at the bank. The piece is a protracted exercise in goalpost-moving, as her premise is that what Goldman’s critics accuse it of is not using the power of the state to bail itself out and enrich itself at the expense of others, but of having “designed the kind of hive mind that controls anything it touches.” According to Moore, the defense against the charge that Goldman executives have “the kind of hive mind that can control everything that it touches” is the fact that they fared so badly in their attempts at “controlling” government and popular opinion. She actually writes the following:

If you believe that Goldman Sachs has designed the kind of devastating hive mind that can control any institution it touches, including the U.S. government, you also have to explain why Goldman Sachs alums have a history of not functioning terribly well outside of Goldman. Why, for instance, did Henry Paulson, by all accounts a brilliant man, flounder about in the politics of the Treasury so desperately that he was forced at one point to plead with Nancy Pelosi on bended knee? Why did the first TARP overseer, Neel Kashkari, get yelled at by Congress while performing the thankless job of managing the $700 billion kitty of the government? Why did Edward Liddy, former Goldman board member who served as the new CEO of AIG (AIG), quit in a huff over bonuses?

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Moore here is arguing that because Hank Paulson actually had to beg the House majority leader for $700 billion in no-strings-attached money to bail out his buddies, and because Neel Kashkari got “yelled at” for unilaterally changing the TARP mission in defiance of congressional orders (and for refusing to provide congress with information about where TARP money went and how he chose whom to give it to), and because former Goldman banker Ed Liddy evoked popular anger for using public money to shell out bonuses to the very department of AIG that bet $450 billion without having a dime to cover it (“necessitating” the bailout), that all of this somehow is proof that Goldman does not “have the kind of hive mind that conrols everything.”

In Moore’s mind, (or, as a friend of mine would put it, “in what passes for Moore’s mind”) this is a defense of Goldman because, if Goldman was as powerful as we all say, Goldman would have just zapped its “hive mind” at Nancy Pelosi, congress, and the public, and none of those parties would have bothered to criticize the bank. Logically put! Let’s put this argument into the form of a syllogism:

All all-powerful hive-mind institutions can make themselves immune to criticism,

But, Goldman Sachs failed to prevent absolutely everyone from complaining about its behavior.

Therefore, Goldman Sachs did not use public money and influence with the state to make itself billions in profits.

It gets better. Steaming ahead from there, Moore blows off the question of how Goldman made its profits this year, and simply assumes that the rest of us are not aware that Goldman has a wonderful corporate culture that is the root of its success. Among other things, the bank apparently encourages openness and disagreement (it’s funny how those of us on the outside of the bank do not notice these qualities too much)! Here she explains:

It’s not that Goldman doesn’t have its egos — it surely does — but as a matter of management, the firm also has several safeguards in place to keep rampant egos from destroying decision-making. Another thing that makes Goldman different from other firms is not that all Goldman bankers agree but that they are free — and, in fact, encouraged — to disagree.

So, gosh, I stand corrected, I guess. Because I thought that Goldman made a ton of money this year because it got a special waiver (fast-forwarding through the usual five-day antitrust waiting period, thanks to their buddies in the Fed) to instantly switch to bank holding company status and make itself eligible for $28 billion in FDIC-backed lending. I thought it got $13 billion in public money via the AIG bailout and hundreds millions more in extra underwriting fees through its work underwriting stock for banks repaying TARP money. I didn’t know that it made all that money because it had internal safeguards in place to rein in egos. I feel foolish now. Moore proceeds with a touching story:

John Thain once presented a case for Goldman’s IPO to the management committee, and several of his fellow partners disagreed. Thain’s reply to his vehement colleagues, according to Bloomberg: “Would it hurt you to suck up to me once in a while?” CFO David Viniar is a dragonlike protector of the firm’s balance sheet, known to shoot down trading ideas and expansion plans day in and day out. Viniar’s default answer, according to Goldman bankers, is “No,” and he is known for his even-handed rejection of expensive schemes.

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Yeah, David Viniar, he’s really a demon when it comes to rejecting “expensive” schemes, isn’t he? Like the time he green-lighted that $20 billion in counterparty risk to that knucklehead Joe Cassano over at AIG, or the time he flinched when Blankfein wanted to jack the firm’s debt-to-equity ratio to 24-1 (oh, wait, he didn’t flinch. That was some other universe). And John Thain, I can see how great all of that famed Goldman humility culture has been for him. Dude only ordered a $1.2 million office renovation for himself while at Merrill (including a $1400 waste basket and the infamous $87,000 area rug) despite the fact that the firm had just seen $8.4 billion in write-downs under his management and laid off 3,300 people. Guess that ego really was reined in!

Moore goes on. It turns out — and this is another thing us critics of Goldman were not aware of — that there is a strong Attaboy! culture at Goldman, Sachs. It’s not that the firm sold crap $500-million mortgage deals with equity-to-value ratios of 99.21% as AAA-rated securities, then bet against those same securities; no, that’s not how they made their money. They made their money because management makes sure it feels just so darn good to work hard and do well there! Moore recounts:

Also, Goldman bankers and traders use the voice-mail system to give colleagues frequent snaps for a job well done. I was once in the office of a Goldman partner when he left a voice mail for a junior banker thanking her for introducing him to her client. Goldman won the piece of business. The implication, as well, was that it would be remembered at her year-end review. At most other firms, that’s a rare gesture.

But that isn’t all. It turns out there’s more to the secret of Goldman’s success: clothes! You see, while the executives of other companies needlessly waste their money on fancy suits, the highly-focused men of Goldman Sachs put all their effort into the job:

Goldman bankers also don’t look like other bankers on Wall Street. (And I don’t mean that they’re all bald and went to Dartmouth.) The firm has a reputation for producing menschy, nebbishy types who physically betray none of the intellectual magic ascribed to them; frayed cuffs, baggy suits, and lost buttons regularly adorn even the firm’s highest-earning millionaires and are worn as a source of pride. Goldman Sachs is suspicious of flashiness in an industry in which the most prominent bankers are beautifully dressed in snowy collars and suits so precisely tailored and finely woven that the wool fabric reflects light.

Moore wrote that passage at the bottom of page 2 in her piece. I expected the “point” to be in whatever paragraph began the next page. I clicked and read, instead:

At a financial conference at the New York Stock Exchange in 2006, I saw Lloyd Blankfein waiting his turn to go onstage while standing in a crowded room of reporters. Journalists, standing three-deep, surrounded bank executives at the conference. But not one reporter in the room seemed to recognize or approach the unassuming Blankfein, who was in shirtsleeves and wearing a baggyish suit — and also, at the time, was the chief executive of one of the largest investment banks. Byron Trott, the Goldman Warren Buffett, lacks flash; he looks more like a prosperous Midwestern architect than a millionaire Master of the Universe.

Again, apologies are in order! It’s not that Goldman cooked its first-quarter profit numbers, or was using a computer program that by its own admission could be used to manipulate the New York Stock Exchange, or that it got a special waiver for the entirety of 2009 to ditch traditional accounting to make its risk appetite look lower, or that it gorged itself on public money for a year and turned almost all of that money into bonuses for its employees, in the middle of a crisis in which vast numbers of Americans are literally going hungry and losing their homes. All of that is an error of perception. Why, just look at Lloyd Blankfein! Would a man wearing a suit that baggy be guilty of such things?

This is really what Moore is saying! It’s that stupid! Enjoy it while you can, folks, because one doesn’t often see p.r. flacking this entertainingly ham-handed and idiotic. The ones who are capable of it, they usually don’t survive to adulthood; they get clipped from the herd by predators.

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Moore concludes with the following passage:

So you can see why Goldman alums sometimes don’t do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it’s hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective.

So let me get this straight. Goldman Sachs employees are so used to criticism and the free exchange of ideas that they flounder once they’re in public office, where “no one questions their premises” and “it’s hard to get good feedback”? Am I having an acid flashback, or is this the same Heidi Moore who 360 words ago was bitching about how Paulson, Kashkari, and Liddy faced such heated resistance to their “premises” after leaving Goldman?

This Moore piece, it shows how desperate the game has gotten for Goldman. They and their shills are reduced now to arguing that they make their money because their employees pat each other on the back and do trust-falls to instill mutual confidence in each other. The whole world is throwing heavy subpoenas and damning stacks of numbers at them, and they’re coming back with, “We succeed because we let a smile be our umbrella.” This s__t is literally as weak as it gets.

This article originally appeared on True/Slant and is reprinted with permission.