A massive new history of Goldman Sachs fails to ask serious, important questions about the firm, says Nomi Prins—and just continues a troubling trend of adulation.
I started at Goldman Sachs after a nine-month interview process. A few months later, I got some advice from a former partner, who then ran the mortgage department: “Don’t worry about how much time you spend with clients. If you want to do well here, remember that senior management are your real clients.”
That’s the firm I knew, and unfortunately for all us, seems to be the reporting strategy that William Cohan pursued in churning out his new Goldman history, Money and Power: How Goldman Sachs Came to Rule the World, that pulls off the seemingly difficult feat of being both incredibly windy and exhausting (nearly 700 pages!) yet completely non-illuminating.
Cohan heavily touts his access to the big boys. But if he had posed even one tough question and written about the stone-faced silence he received in return, it would have been more interesting than the Oprah-confessional quotes he provides. Here was a chance, for example, to figure out if Robert Rubin and others intentionally manipulated clients in the Penn Central cases. Instead we get to know the worry this affair caused Goldman and get a chapter-ending vignette, about when former CEO, Gus Levy, passes away, “I’ve always regretted that I’d never asked him what he, driving himself all day long every day,” Cohan quotes Rubin as saying, “thought life was all about.” Clearly, the man needs a hug.
Even when he dips his toe into observation, Cohan frustratingly doesn’t linger long enough to provide any context. Much of the history covered in the first three-quarters of this book we’ve read before. Marcus Goldman, ambitious Jewish immigrant, transforms his lending to companies sidelined by major banks into a powerhouse of financial prowess, growing first through family, later through friends. We know about comedian Eddie Cantor’s jokes about Goldman Sachs’ near flameout due to its over-leveraged 1929 trusts, the Sears deal (Goldman’s first big retail IPO), the Ford deal (the biggest deal of its time), the feared reputational damage when high-ranking partner Bob Freeman was indicted in a 1987 insider-trading scandal, the call to Washington Robert Rubin got from Bill Clinton, the battle between then-rising CEO Hank Paulson and then falling-co-CEO Jon Corzine over Goldman’s 1999 IPO. Into all this fabric, Cohan stitches some detail, but doesn’t bring much new to the table. Indeed, even the stitches are lazily constructed.
If Cohan worked at Goldman, he’d get promoted for skimming the edge of conflict—and then coming out swinging for the team.
In the final quarter of the book, Cohan regurgitates familiar ground—from Goldman's mortgage shorts episode to how expertly Dan Sparks played dodgeball in front of the Senate last year. Cohan’s interviews with Sparks and others involved shed no new light. There’s no smoking gun here. Cohan covers Goldman’s revolving door with government as so many others, from Robert Kuttner to Robert Scheer to Yves Smith have done, but doesn’t explore what these relationships provided the firm in monetary terms in fresh and additive ways.
Was Blankfein really “forced” to take $10 billon of TARP money by Hank Paulson “to restore investor confidence” as Cohan writes—or did he strategically lead his firm to $63 billion worth of debt guarantees, federally backed AIG repayments, and short-term Fed loan access, because it was a no-brainer situation? How did Goldman use the money before returning some of it—besides the bonuses and new digs? How did Robert Rubin’s desire to go to Washington lead to the trashing of the regulations that would have contained the latest financial crisis? How did being Barack Obama’s (or anyone’s) key campaign contributor help the firm make money? How did Goldman manage to navigate the financial crisis so well and yet, Cohan questions whether it still has adequate support in Washington?
There are interesting angles that offer potential, but these are the parts that Cohan, despite spitting out enough words to fill a phone book, somehow does not have room or time to delve into. He misses an opportunity to examine not just political expediency, but competitive cunning in the close relationship former Goldman leader, Sidney Weinberg, forged with FDR. Indeed, Weinberg sat at the helm of a voracious non-commercial bank that would be untouched by the Glass-Steagall Act, even as some of its main competitors would be split up, their capital bases weakened.
Similarly, there’s only glancing examination of the Korean War-era antitrust case against Goldman that facilitated its rise, or the 1970s lawsuits alleging that Goldman put its own interests before its clients (Cohan compares it in passing to the more recent instance of the great Fabrice Tourre, but doesn’t go much further).
Rolling Stone reporter Matt Taibbi once told me, “Not only don’t these guys talk to me, their PR people don’t even talk to me.” Yet even without access (or maybe because of its lack), Taibbi’s book, Griftopia, contains far more provocative, critically reasoned, and revealing information about Goldman’s methodologies and approach to “winning,” no matter what the collateral damage, than Cohan’s does.
Instead, Cohan’s book concludes on an operatic note, where we discover how badly current CEO Lloyd Blankfein feels about everything, before leaving to meet some unnamed dignitary. I can imagine Lloyd leaving his Cohan sit-down, grinning— business will go on as usual. If Cohan worked at Goldman, he’d get promoted for skimming the edge of conflict—and then coming out swinging for the team. In missing how Goldman’s quest for money and power affects other people, and the nation, this book undeniably misses opportunity, and is thus arguably, a disservice to the country.
Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.