The current rage on what passes for Wall Street these days is to pin as much of the blame as possible for the world's credit crisis squarely on to the wide shoulders of Goldman Sachs. The logic being that since Goldman Sachs—and its loyal alumni—now effectively rule the world, the firm and its offspring do everything they can to make that world better and safer for Goldman Sachs. Everyone else be damned.

The logic of the conspiracy theorists in this regard is, of course, impeccable: Goldman alumnus Josh Bolten runs the White House, while his former boss, Hank Paulson, runs the Treasury. They both speak regularly to former Treasury Secretary Bob Rubin, now over at Citigroup, who ran Goldman before Paulson and who keeps Paulson and Bolton dangling like puppets on a string. They all supposedly touch base with the heads of the Italian and Canadian central banks—both Goldman alumni—and with Robert Zoellick, head of the World Bank, ex Goldman. What's more Paulson is now getting his advice on how to handle the crisis from Ken Wilson, the recently retired Goldman partner and financial-institutions M&A banker, who Paulson just recruited to Washington to help him out. Already at Treasury were Goldman alumni Dan Jester, Anthony Ryan, David Nason and Bob Hoyt, the department's general counsel.

Even if you have the nicest house on the block, if the block is burning down that is of little importance.

And—the conspiracy crowd can't help but point out—Neel Kashkari, 35, a former vice-president at Goldman who Paulson recruited as assistant secretary of international affairs in 2006, has just been appointed—by Paulson—to run, on an interim basis, the new $700 billion bailout fund. Harder to explain is why Robert Steel, the ex-Goldman partner and Treasury official, left Treasury in July for Wachovia after helping push Bear Stearns into the arms of JPMorgan. If Steel was so smart and connected, why did Wachovia promptly go belly up after Steel invested $16 million of his own money on one million shares of Wachovia's stock?

The conspiracy is bunk, of course. "It's preposterous and laughable to say that we're involved in a conspiracy theory with certain select groups of clients to try and take down a firm on Wall Street that we actively did business with every day of the week," explained Goldman Sachs co-president Gary Cohn, in a recent interview. "I need these guys to survive. We all live in the same neighborhood. Right now, I'm the only guy that's got a nice house. My gutters are attached. My windows aren't broken. My shutters are on. But at the house to the right and the house to the left, there are broken windows and shutters. So it doesn't matter how nice my house is. It's worth less than if those houses are nice."

Notwithstanding Cohn's credible explanation, the stature of the myth continues to grow. After Bear's demise last March, newly retired CEO Jimmy Cayne blamed Goldman Sachs, among others, for hastening its death. And at least one former Lehman Brothers banker, Jarett Wait, who left the firm earlier this year for hedge fund Fortress Investment Group, reported back to the senior executives at Lehman, on July 22, that after just a few weeks at Fortress that "it is very clear that GS"—Goldman Sachs—"is driving the bus with the hedge fund [c]abal & greatly influencing downside momentum [at] Leh[man] & others!" according to an email message that Thomas Humphrey, the head of global fixed income sales at Lehman, sent to among others Bart McDade, the president of Lehman. McDade then passed the email on to Dick Fuld, the CEO of Lehman. Fuld responded a few hours later: "Should we be too surprised. Remember this though—I will."

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