Goldman Sachs Reputation Destruction Tour
WSJ: A commission probing the financial crisis denounced Goldman Sachs Group Inc., saying the firm first dragged its feet over requests for information then dumped hundreds of millions of pages of documents on the panel.
The Financial Crisis Inquiry Commission issued a subpoena to Goldman, demanding that the firm provide a key for identifying customer names and a way of matching up specific documents to the commission’s requests for information. The subpoena also demanded documents concerning Goldman’s mortgage-backed derivative securities, which are central in current federal probes of the firm.
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The ongoing destruction of the once bullet proof reputation of Goldie continues apace.
The brutal combination of inept management, poor legal advice, and horrific decision making is combining is uniquely ugly ways to further damage their reputation — as if that were possible. Hard as that is to imagine, their PR — recently ranked as “For Shit” — is now heading south from there.
I am hard pressed to name any management team that is more politically tone deaf than the group that was once thought of as a brain trust. They seem to be suffering the effects of blunt head trauma. or maybe the chemicals from the new construction at 200 West St is making everyone there loopy — a form of chemical poisoning that has made them all stoopid.
Are they secretly fans of Matt Taibbi — and this is a way to help generate more material for him? Did Goldman secretly hired Dick Fuld and Stan O’Neal as their new co-CEOs — to help dismantle the place?
Unless — yes, this must be it! — This is a secret plan to make a big banking client’s management team — some energy firm called BP — look good by comparison!
These are the only things I can imagine that explains some of the really dumb-fuck-decision-making going on at GS. Other than these explanations I cannot figure what in tarnation is going on at 200 West St . . .
Any ideas?
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Source:
Goldman Accused of Stalling by Panel
JOHN D. MCKINNON And SUSANNE CRAIG
WSJ, June 8, 2010
http://online.wsj.com/article/SB10001424052748703303904575292530057313818.html
Goldman Deserves Regulatory Probe in Bloomberg Poll
Christine Harper and Robert Schmidt
Bloomberg, June 8 2010
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8l62MgIkXFs&
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June 7th, 2010 at 9:21 pm
It’s called “arrogance”, BR. They (some would say rightfully so) think they’re untouchable, bullet-proof. We’ve seen this story before.
June 7th, 2010 at 9:41 pm
What Goldman forgot when they declared themselves: “We are the World!”
This is the REAL “WE ARE THE WORLD…and forget the celebrity…the truth is there in the words….!
http://www.youtube.com/watch?v=M9BNoNFKCBI&feature=related
June 7th, 2010 at 9:43 pm
BR, Why don’t you say how you feel? [BR: I better get to work on that right away!]
Should this be some kind of shock? Hello. Executives and politicians now consider themselves elites beyond reproach. How dare someone challenge their royal position. Meritocracy has been gone from the American, and perhaps global, scene for about 30 years by my estimate.
Bob Allen is the first to come to mind at AT&T.
It’s not a good sign.
Tar and feathering my not be a lost art after all.
June 7th, 2010 at 9:49 pm
“I am hard pressed to name any management team that is more politically tone deaf than the group that was once thought of as a brain trust….”
BP comes to mind.
June 7th, 2010 at 9:51 pm
What does it matter if people are willing to buy their stock? It’s still over $100 and I’m sure Mr. Buffett will belly up to the trough if it dips below. Crap reputation aside, Goldman is a money machine. Unless GS is a penny stock by Christmas, all this teeth grinding about Goldman is just backbiting Classism.
June 7th, 2010 at 9:53 pm
they’re too busy doing god’s work
June 7th, 2010 at 10:04 pm
Like the flak for the Bush administation who said we make our own reality. GS seems to feel the same. Here’s a thought. We can invent an A bomb, a CDO or a deep water well – but we don’t know how to deal with one that blows up in our face. As Mel Allen used to say. How about that!
June 7th, 2010 at 10:07 pm
A: An attack of conscience?
June 7th, 2010 at 10:12 pm
Is it ‘Arthur Anderson’ time yet?
Or Dr. Kevorkian?
But that $23 billion in bonus money was a nice touch…
June 7th, 2010 at 10:15 pm
Maybe they just don’t give a shit BR.
After all, douche-bags like GS are ruling, who on earth are they supposed to be afraid of?
Some fraud inquiry they can easily pay themselves out of, or just switch management, the old guys will never get prosecuted anyway (otherwise Greenspan, Rubin and co would already be there).
They don’t need popular support to be players, they own the joint.
June 7th, 2010 at 10:16 pm
“Other than these explanations I cannot figure what in tarnation is going on at 200 West St . . .
Any ideas?”
I don’t know may be there is a “smoking gun” and they are trying to hide it as much as possible even if deep inside they know they will fail?
June 7th, 2010 at 10:18 pm
The money-making geniuses at GS believe the Congress, the SEC, the Fed, etc. are tyros in the world of high finance. It’s a clear sign of disdain to drop crates of unkeyed documents on the freight elevator at the FCIC. Why didn’t they just send some flaming dog poo filled paper bags?
The most powerful people, organizations, even countries have treated the US Gov’t like garbage since the beginning of the nation’s history. Uncle Sam buried all of them.
The US Gov’t is often viewed by its adversaries as a finite thing, a formidable corporate opponent, say.
But it’s not that, at all. As the Founders planned, it is the mouthpiece and henchman of “the people.” It derives therefore a degree of unmatched social authority. It can and will be the arbiter between right and wrong — however imperfect.
And beyod that, the US Gov’t can make and enforce the law.
.
.
June 7th, 2010 at 10:18 pm
This is simply an extension of the antagonistic stance GS has developed with their clients and the broader market over the past few years. The culture of GS has become puerile, riddled with selfish and short-term notions.
Trust is the currency of the banker, and GS should be paying a bit more attention to these accounts.
June 7th, 2010 at 10:28 pm
Goldman is still making lots of money. They have good friends, who help Goldman when the chips are down, running the key committees in Congress, the US Treasury, the Federal Reserve, the National Economic Advisory Council, and the White House Chief of Staff’s office. Phil Angelides’ comments are a minor and temporary irritant for Goldman, nothing more. Goldman remains right on track.
June 7th, 2010 at 10:29 pm
krbecarson Says:
June 7th, 2010 at 10:18 pm
This is simply an extension of the antagonistic stance GS has developed with their clients and the broader market over the past few years. The culture of GS has become puerile, riddled with selfish and short-term notions.
Trust is the currency of the banker, and GS should be paying a bit more attention to these accounts.
—–
Yes…and they were declared “Too Big Too Fail…(too corrupt to fail?) by the very people they have put into high positions in our Government for well over a Decade.
Blame Obama for this? They were there before and made sure they would stay. McCain/Palin in the WH would have had the same folks installed.
GS…RULES…they made SURE THEY DID.
Matt Taibbi was correct…VAMPIRE SQUID WITH BLOOD FUNNEL INSERTED in every place of power!
June 7th, 2010 at 10:34 pm
Barry, they’ve got the same CEO and the same Board doing the same things they’ve always done and yet you are expecting different results. You know by definition, that would make you insane. Perhaps they are fans of Oscar Wilde….”A little sincerity is a dangerous thing, and a great deal of it is absolutely fatal.”
~~~
BR: I think you need to judge the management team pre and post bailouts. Beforehand, their behavior and decision making was fine.
It is their response to the public, the the FCIC and to the changing environment that is in question . . .
June 7th, 2010 at 10:36 pm
Goldman loves them some BP. How fortuitous that there is other dramatic fodder for the media cameras. . .coincidence?
June 7th, 2010 at 10:50 pm
I just read someone’s idea for FCIC, which is make GS deliver the docs as electronic text, dump it onto a server, and then ask Google to add a search-engine on top of it. Not a bad idea. Bet Google can help them refine the searches to organize the data pretty well.
June 7th, 2010 at 11:18 pm
Even the pro-business half of the G2 said…
“…Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US…”
http://www.ft.com/cms/s/d9c3df36-7195-11df-8eec-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fd9c3df36-7195
June 7th, 2010 at 11:22 pm
OCR is extremely accurate nowadays. Just scan them into a bunch of copiers, hire some data miners and a few guys over at the GAO and have at it. This could be Goldman’s biggest blunder yet. How do they still have customers? Is their competition really that weak?
June 7th, 2010 at 11:23 pm
Manwich is right. But the problem is a type of mentality rampant among elites in our country.
From Chomsky:
As U.S. competitiveness continues to decline and it cannot afford its endless wars without drastically cutting social spending, countless more Americans will find themselves paying the price for U.S. elites’ imperial mentality.
This mentality described by Chomsky includes the following elements:
(1) a single-minded focus on maximizing short-term elite economic and military interests;
(2) a refusal to let other societies follow their own paths if perceived to conflict with these interests;
(3) continual and massive violations of international law;
(4) indifference to human life, particularly in the Third World;
(5) massive violation of the U.S. Constitution, especially through the executive branch’s seizure of the power to wage unilateral and unaccountable war in every corner of the globe;
(6) indifference to U.S. and international public opinion, which is often more progressive and humane than that of the elites;
(7) a remarkable ability to “manufacture consent,” aided by the mass media and intellectuals, that has blinded most Americans to the truth of what their leaders actually do in their names.
June 7th, 2010 at 11:29 pm
By the way, GS thinks the US dollar is overvalued. These are the guys that sold 44% of their BP stock in march just before the gusher. So what now, should we buy rubles?
June 7th, 2010 at 11:47 pm
You know, the incompetence of congressional committees seems contrived to me. What lawyer hasn’t heard about the old “document dump” procedure? And searching documents? Give me a break here. Data base programs 20 years ago could assemble, collect and collate documents in myriad clustters and catogories. Cross referencing can be quite simple or sophisticated. As long as all the documents are in a readable format, it’s just not that big a deal.
Google isn’t “where it’s at” here. Google specializes in studying what you enter to divine what you might like to buy. Common words and phrases are not what a congressional committe is looking for either. Sure, Google could do it but have these people in congress never heard of data base programs and cross reference lists? While we’re at it, did the “requests” for documents specify including a cross reference of all documents by A,B,C, yada, yada, etc? Are these guys making the requests lawyers or future lobbyists for GS? WTF?
June 7th, 2010 at 11:59 pm
Thieves find abiding by the rules, even short term, very annoying.
June 8th, 2010 at 12:05 am
@AGG-
RE Data dump. Seems like gaming the system from the inside. Intentional prosecutorial incompetence, just like the Ted Stevens case. They flubbed it because they were told to flub it.
Citing Chomsky, what are you? A G-ddamn commie!?! Are you BFF with Studs Terkel’s ghost or something?
I will be reporting you to Roy Cohn’s ghost…if I can get him away from J. Edgar for a second- that Hoover guy takes his surname too seriously.
And for all you FBI boys…fix yer makeup, you look a wreck…
June 8th, 2010 at 12:08 am
Any ideas?
Yeah, I’ve got one. I’ve said it before but it bears repeating. GS knows its public reputation is trashed. It knows that it must feed the public’s need for retribution. It knows that the public loves to see the rich fall, but is forgiving of those who admit failure and express a desire to change their ways. (GS needs to borrow the PR firm of a few actors and singers).
Perhaps GS is fighting this suit to create a visible public struggle. Then it will give a tearful public apology and pay a large fine, and also agree to assist support financial reform. Apology and repent, the magic formula.
However, the fine will be “large” but not to GS since it will be paying with the public’s money anyway. The fine will be for all sins committed (just like after the dot-com bubble) and the investigations will stop. Nobody will lose their jobs, be banned from the financial services industry, or go to prison. GS will support financial “reform” but in the fine print it will let them continue to do whatever they want.
The SEC and the Justice Dept. will declare victory. Congress will be proud.
Let’s keep in mind that the current Managing Executive of the SEC’s Division of Enforcement is a former Goldman alum. He’s a mere 30 years old, has no experience in government, regulation, or enforcement, and isn’t an attorney. He was put into office just eight months ago, after this scandal was apparent.
BR, when are you going to do a blog post on Adam Storch?
Also, do you find it interesting that Rahm Emanuel was paid $16.5 million working on only eight deals at Wasserstein Perella? He started there with no i-banking experience as a 40 year old with degrees in Liberal Arts and Communications.
June 8th, 2010 at 12:19 am
@AGG – au contraire, I think Google is exactly where it’s at.
Databases require going through the reams of information to index and group it. That’s too time-consuming. If Google were to put a dedicated engine on top of the few terabytes of data GS is providing it would probably be mere minutes to automatically associate keywords/relevance in all the documents. Google probably could throw in a few tricks to make it even more useful for the specific purpose the FCIC has.
The point is that the old ploy of “baffle them with a ton of bullshit” means nothing in the age of tech. And unless the GS lawyers went through every document themselves, they might be handing over more than they thought they were without even knowing it.
June 8th, 2010 at 12:28 am
Ah yes, Stan O’Neal. As late as the Summer of 2008, Jim Cramer wrote a lengthy piece dedicated entirely to the notion that we should all give credit to Mr. O’Neal’s confidence and assurances that the credit crisis was not as bad as being portrayed in the media.
June 8th, 2010 at 12:47 am
then dumped hundreds of millions of pages of documents on the panel.
Temper tantrums are a virtual admission of guilt
June 8th, 2010 at 1:29 am
Perhaps Google’s search engine could best be employed to discover what’s not there. This would explain why it took so long to turn over the docs; there were hundreds of millions of pages…
June 8th, 2010 at 1:35 am
Goldman has obviously made a very unselfish and noble decision to take all the media flak on themselves to protect their beloved banker brothers and sisters. By obviously taking a dive, allowing themselves to be portrayed as selfish, arrogant, dishonest cutthroat creeps, their weaker peers in the banking business have breathing room to get back on their feet. It is one of the most unselfish acts I’ve ever seen, and all the criticism of such honorable and unselfish people is hurtful and misguided. Lloyd Blankfein is a saint.
June 8th, 2010 at 1:39 am
IMO:
a) They are basically criminals and are acting as such.
b) they know they are guilty as hell about something as yet undisclosed and are stonewalling it in hopes of avoiding prison and financial destruction.
June 8th, 2010 at 2:00 am
“They seem to be suffering the effects of …a form of chemical poisoning that has made them all stoopid.”
Only now coming to this conclusion, BR? After all, this is the company that, when AIGFP had a sale on end-of-the-world insurance, they backed up the truck.
June 8th, 2010 at 2:12 am
@Arequipa01,
Agreed on the flubbing.
As for any “ism” that I am partial to, I’m not political. I just resent dictatorships with snazzy titles like “free market democracy” which are nothing but a PR front for a bunch of greedy pigs.
I think Barry said this: We do not have free market. I agree. And that sucks.
No, I never wore a tutu. Not my thing.
June 8th, 2010 at 2:25 am
@Tarkus,
I hear you but you can bet your sweet bippy that GS went through that dump with a data base program to knock out anything they didn’t want published. Congress shouldn’t be asking for a key; they need to ask for the software that GS used to generate the document dump, what was exclude and WHY. The old data base programs were hampered mainly by processor speed and memory space. Niether of those things are a factor now. When you are dealing with text, word associations are blindingly fast so you don’t even need a super computer to go through millions of documents quickly.
Now, if you are dealing with graphics, things get real complicated quick. For a pattern search, I would go to Google because that is state of the art stuff. But I’m sure GS isn’t into secret messages on porno pictures for the SEC. Then again, you never know…
June 8th, 2010 at 3:20 am
I’ll go with arrogance, being totally out of touch, and the knowledge that they are essentially untouchable. Blankfein and his merry band of Baby Squid know that after all the huffing and puffing, the posturing and ranting, and sifting through (literally) billions of pages of documents, they won’t find a damn thing illegal.
GS owns the system, wrote the rules, and pays those “elected” to enforce those rules.
There is nothing illegal about being a vampire squid. It’s just the American Way.
June 8th, 2010 at 4:36 am
CEO character flaw?
June 8th, 2010 at 6:09 am
[...] Disclosures « Goldman Sachs Reputation Destruction Tour [...]
June 8th, 2010 at 6:24 am
I would imagine they all know why they are on borrowed time. Think about it, why would u print 100% day trading profits in q1, and probably similar in q2, which everyone knows is statistically impossible?
Everyone of these banks has a different story and possibility for survival, yet, the real tell will be how criminal were they?
A. Citi-group, government owned, worlwide, can easily be chaled up to incompetence, and vikram has taken some tough medicine, and flies low.
B. BAC, ken lewis already gone, they did a few favors, picked up some dead carcases for high prices, pure logic says these guys may really be Too Big Too Fail, so, and again, i’d say these guys have been more incompetent than criminal.
C. Morgan Stanley, Mr. Mack pretty much stands alone, he most likely knows what is what and what the industry has been doing, sure, he sold similar crappy products at times, yet, no where near the magnitude, he’ll get a pass……….you need some competition with brokers and investment houses.
D. GS- even though they have bank status, they still are not a bank which means they in fact are not needed for the flow of coroporate, business and personal payments, in the us of a and worlwide. If you just note the big stories on them in the last year imho it will end up looking like arthur anderson in the end……….90% of AA audits were fine, 10% a total joke that could be tied to the top, which imho will be GS’s problem in the end, 10% of there business were blatant rip-offs which will be tied to the top guys, bye bye bye………..GS………………….why else would u bonus yourself insanely, because when the shyte hits the fan……..clawbacks will not happen, folks will be satisfied the squid is dead, period end of story.
E. JPM, with there derivative book probably too big too fail, behind closed doors i’m sure Jimmie has been read the riot act, clean up or get broken up. U know they got dozens of Jefferson County Alabama situations on there books, which is a total rip-off, there saving grace was being small in sub-prime.
The only way too cut off GS’s political influence is to bring GS down, them federal employee’s can’t be found to be bad, can they, even if they were what could they do. Someone, somewhere wants the umbilical cord severed forever, and unlike country tunes where they croon they will miss you when you’re gone, not one damned person will miss GS, not one. I’d say they are well aware there days are numbered and the longer they can hang on the more bonus money they can squeeze outta others. The top guys know the score, they will not serve time, they were not enron, worldcom, or tyco, they were just the smartest white collar criminals in the room………and folks want it stopped.
jmho
June 8th, 2010 at 6:33 am
Only a vigilante or group of them can stop the Lord Blankfeins of New York.
Given the state of our militia, and the pathetic response of the real cowboys, don’t hold out much hope for that to happen.
June 8th, 2010 at 7:13 am
Complacency. They think they own the govt
June 8th, 2010 at 7:22 am
I’m just happy the commission finally figured out they could issue subpoenas.
June 8th, 2010 at 8:05 am
In order to know what might be missing, first you need to know what you have. Having the docs collated by keywords and date of creation would immediately add structure and separate the chaff from the relevant data. It may also turn up some interesting side-bits. Also, any obvious hole in the chronology or created documents would mean the information was tampered with before it was turned over, a giant red-flag.
June 8th, 2010 at 8:33 am
They are either a) irrational or b) rational. If they are irrational, then there’s no use trying to figure out why they do what they do… they’re literally insane. On the other hand, if they are rational, then the only explanation for this is that they are trying to cover something up. I would take this as a sign it is time to run as far away from GS as possible. Cover-ups could work for a short time, but pissing of the Federal Gubment ain’t the way to do it.
June 8th, 2010 at 8:50 am
This is what happens when the dregs rise to the top.
June 8th, 2010 at 9:02 am
I believe that such behavior seems insane in isolation, but in the context of many years its entirely reasonable. That is to say, GS has been taught by government and market participants that this kind of behavior is successful. It is no secret or new development that GS has told most everyone they deal with to go straight to hell, and refused to be reasonable in any way.
It is also nothing new to note that being functionally sociopathic is not just accepted at GS, but seen as a core competency and the only way to succeed. In their case, I would define sociopathic as an entity that, if faced with payment of a nickel for skinning a baby alive, would hire someone depraved to do it for a penny and then announce “wow! that was an easy four cents!”.
Clients put up with it because they delivered results. The government put up with it because they were bought and paid for, and because they were seen as champions of U.S. commercial interests. Externalities were ignored by all because the organization was so “successful”.
Now we have a monster that knows no limits. Well folks, we created it one pathetic, obeisant, and short-sighted rationalization at a time. If we want to stop this, we need to really hurt them. Eliminate their ability to conduct financial business in a few key areas, and that might get their attention. Anything short of that, and we might as well tell jack the ripper to “be nice to the ladies”.
June 8th, 2010 at 9:05 am
A reflection of society today where anything can be buried in legalese, even if you are right you have to wait for someone to bury through the pile to discover the wrong doing.
Just look at the Union Carbide case from 1984, that has finally been settled, only took 26 years.
The old adage justice delayed is justice denied, unfortunately the banking class know this all too well.
June 8th, 2010 at 9:45 am
From a complex litigation standpoint, this would be a standard chickenshit “data dump” move by GS that clearly abuses Federal Rule of Procedure 33(d) and violates the general rule requiring parties to cull irrelevant information from discovery requests.
BUT THE FEDERAL RULES OF CIVIL PROCEDURE DO NOT APPLY TO CONGRESSIONAL SUBPOENAS.
Does this cut both ways (i.e., helping both Congress and the subpoenaed party?) No, it only cuts one way — Congress’s way. Congress has the authority to make a criminal referral for noncompliance with a subpoena.
Unlike the mechanical civil litigation process, this is a political process (duh), meaning the SMART thing for GS’s counsel to have done would have been to reach out to the Committee staffer handling the request and discuss difficulties/issues in complying with the request. That’s how it’s done.
Or you can say “fuck you” to the Committee and see what happens. That’s not discreet or elegant, which is the way the big power boys on Wall Street traditionally operate. It’s fucking idiotic because it is so, so public.
Barry’s right — this is an indication that GS senior management is losing (or has lost) their shit.
June 8th, 2010 at 9:50 am
BR…your reply at 10.34pm…pre bailout they were buying subprime loans. Hardly a good management decision, either at the time or in retrospect.
June 8th, 2010 at 11:17 am
US corporate philosophy:
“Fuck you. Whadda you gonna do about it?”
Same as it ever was.
June 8th, 2010 at 1:47 pm
“Unconscious” conspiracies:
http://viridia.org/2007/08/16/unconscious-conspiracies/
June 8th, 2010 at 1:52 pm
BR denounces GS tactics as inexplicably bad, then asks (“Any ideas?”) if there are any better explanations than the dementia that he essays. I question the original denunciation, which turns on the empirical test: Will Goldman Sachs get away with it or not? I predict that they will; in which case BR’s denunciation is likewise falsified. (This is a country, increasingly, where the preposterous “works” . . . .)
June 8th, 2010 at 3:59 pm
[...] tone deaf than the group that was once thought of as a brain trust,” Barry Ritholtz writes at the Big Picture. “Are they secretly fans of Matt Taibbi – and this is a way to help [...]
June 8th, 2010 at 9:59 pm
[...] Goldman’s reputational issues: Barry Ritholtz has this to say about what is happening to Goldman’s reputation: “The brutal combination [...]
June 9th, 2010 at 10:02 am
Who is making the decisions?
I taught at a Canadian “university prep” high-school that had a very international student body… USA “boarders”, Chinese students who came from Hong Kong and needed at least one year of schooling in Canada to get into a Canadian university and of course Canadians.
My tenure was from 1969 to 1998.
During this period of time I witnessed various changes of attitudes of those students.
Today, as I see political, economic, environmental etc decisions being made I ask myself one question…. What is the age of the person making the decision or at least contributing to the decsion being made.
Any correlations between the ages and the type of decisions being made?
Worth some research?
Worth researching?