Goldman Sachs

Vampire squished?

What is bad for Goldman is bad for Wall Street, but good for regulatory reformers

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Readers' comments



At the absolute minimum, this is a case of conflict of interest. At worst it is a question of too clever by a mile, doing the double bet, designing the instrument, then filling the instrument with cleverly selected items that were chosen to fail, and possibly misrepresenting the contents. In other words, rigging the bet, by rigging the contents of the instrument. It's time for the law to be served cold to prove which of these two cases it is.
Hasan A Hammami


Super-smart? you cannot be serious. Have you ever met any of them? Have you ever worked with them? I have. I recently graduated from one of the top 10 business schools in the world and can tell you that the people that ended up at Goldman are there because they fit their preppy, arrogant cookie-cutter image. They were definitely NOT the smartest of the class.

In 2006, before most people had any idea of the upcoming crisis, I asked a recruiter at Goldman, "What do you think of all the people that criticize you for being arrogant?" Instead of denying they were arrogant, he replied: "I think customers demand it from us. We need to give the impression that we know what we're doing."

Seriously. They make me feel bad about working in Finance.


The real story is how many more banks or individuals will jump on the bandwagon after realizing the vampire squid has sucked out their blood. This is just the beginning and it will trigger legislation in other courts. People need to go to jail over this. The players have demonstrated they have no ethics so we need simple, ethics based regulations. The "super-smart" always seem to squirm around the rules otherwise. We need the investment pros to ask themselves "How can I make money FOR my client?" rather than "How can I make money OFF my client?" when they make a decision and give advice. Until that happens, the waters will never be safe.

J. Kemp

"It even announced a share buy-back."

One imagines Goldman Sachs sees their own stock as an extremely tempting trade. Perhaps they are correct. What did this entire scandal say to the markets about Goldman? It would seem to say that their only downside in matters such as this one, is if they get accused/caught, they can send it off to litigation for some number of years and maybe pay or maybe not pay at the end of the day.

In other words, they are free to gamble as they are accused of having done with their clients' fates, and the downside is not only limited, but it is quite quantifiable, financeable, managable, and conveniently deferrable.

Seems like it is "game on" again at Goldman.


"They walk on water, don't they" - the reporter didn't use those words but he might as well have. As CJ-51 rightly says, everyone is entitled to his/her opinion but one wonders how our reporter knows so much about these super-smart people to put them on such high pedestal.

As someone who worked on the buy-side for a long time, I can tell you that the people at GS are no smarter than those on other top tier wall street firms - they eat the same food, drink the same water, breath the same air and went to the same schools/colleges that other people did. A harvard or wharton graduate who joins citi or MS or ML is no inferior to a classmate who joins GS. And, for a firm of 'super-smart' people they have been extremely bad in their PR having done their best to present themselves as obnoxious villains of this new gilded age.

Neither is it the case that they have done better than other firms in businesses like asset management or plain vanilla brokerage nor are their research calls superior to those of their peers. So what is it that they have done better (ostensibly) - not surprisingly, the opaque, unregulated OTC product trading business where they seem to excel. And, we are now being told that they not have been doing it in a way that served their clients interests (unless they happened to be the favored ones). But even without SEC charges, it wouldn't take a genius to figure out how they make their money - all one needs to do is read Frank Partnoy's book F.I.A.S.C.O. which describes the kind of chicanery that goes on in OTC derivative markets where traders don't think twice before gauging their customers (widows and children included).

It is possible that these shenanigans have been going on at every wall street firm but that can't be the excuse for this sort of egregiously bad behaviour. Not every crook gets caught but those who are caught can't use that as an excuse to avoid punishment. So, while the reporter is entitled to his opinion, he might want to think twice before staking his own reputation on someone who he knows little about.


"Its risk management is top-notch, its people super-smart (and don’t they know it)."
Am not quite sure how you judge 'risk management' and whether it can be judged externally - perhaps you find it a clever thing to say, big, important sounding words and all that.
As for super smart - they are NOT, they are merely liars, half truthers and conniving. This may be 'super-smart' to you but I think it is merely criminal and a nauseating embarrassment to finance professionals.
But we are all entitled to our opinions.



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