Goldman Sachs: Masters of Henry Blodget's Universe!

Author:
Bess Levin
Updated:
Jan 14, 2019
Original:
Apr 2, 2008

Roddy Boyd:

[On the morning of Tuesday, March 11], Goldman Sachs's credit derivatives group sent its hedge fund clients an e-mail announcing another blow. In previous weeks, banks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn't be able to cough up its obligations on an interest rate swap. But on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals. (A Goldman spokesman asserts that the e-mail was not a categorical refusal.)
"I was astounded when I got the [Goldman] e-mail," says Kyle Bass of Hayman Capital. He had a colleague call Goldman to see if it was a mistake. "It wasn't," says Bass, who is a former Bear salesman. "Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them"...
When word of the Goldman e-mail leaked out, the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds.

Blodget:

Should Goldman be blamed for this? Absolutely not. Bear Stearns was under-capitalized, over-leveraged, and stuffed to the gills with crappy debt. Once again, Goldman seems to have outsmarted the rest of Wall Street, spotting a problem before everyone else did.

That's the real take-away from this lil' BSC crisis-- how smart Goldman Sachs is. So smart, so pretty, so Goldman Sachs Sachs Sachy. Goldnutsacks'alicious. In fact, I've written to the powers that be at the OED and asked that they add an entry in honor of my favorite bank. Something like this:
Sachy (adj):
1. Delicious, entirely superior, beyond reproach.
2. Without peer (especially in the context of total superiority)
3. Omnipotent
Ex: The way Freddy executed that trade then fade after disseminating false information about a potential takeover of Luby's was positively sachy.
Etm. From the modern, Goldman Sachs (superior financial institution)
Syn: Superior, Unique, Peerless, Orgasmic
Ant: Thinkequityesque
Wall Street Shocker: Goldman Sachs Destroyed Bear Stearns! [Silicon Alley Insider]

News

A week ago today, a man named Greg Smith resigned from Goldman Sachs. As a sort of exit interview, Smith explained his reasons for departing the firm in a New York Times Op-Ed entitled "Why I Am Leaving Goldman Sachs." The equity derivatives VP wrote that Goldman had "veered so far from the place I joined right out of college that I can no longer in good conscience say I identify with what it stands for." Smith went on to note that whereas the Goldman of today is "just about making money," the Goldman he knew as a young pup "revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients." It was a culture that made him "love working for the firm" and its absence had stripped him of "pride and belief" he once held in the place. While claiming that Goldman Sachs has become virtually unrecognizable from the institution founded by Marcus (Goldman) and Samuel (Sachs), which put clients ahead of its own interests, is hardly a new argument, there was something about Smith's words that gave readers a moment's pause. He was so deeply distraught over the differences between the Goldman of 2012 and the Goldman of 2000 (when he was hired) that suggested...more. That he'd seen things. Things that had made an imprint on his soul. Things that he couldn't forget. Things that he held up in his heart for how Goldman should be and things that made it all the more difficult to ignore when it failed to live up to that ideal. Things like this:

News

Back in March, a young man named Greg Smith published an Op-Ed in the Times called "Why I Am Leaving Goldman Sachs." Greg wrote that despite joining a firm that, in the beginning, cared about "teamwork, integrity, a spirit of humility, and always doing right by clients" and not "just about making money," he'd ultimately come to be sickened by a place that, twelve years later, he couldn't even recognize. A place that, on Lloyd Blankfein and Gary Cohn's watch, had lost its way. A place that, he'd come to see, was devoid of any sort of morals, whatsoever. A place that needed to take a long hard look at what it had become. A place that, he predicted, was not long for this earth. Because unlike Smith, whose proudest moments in life-- "being selected as a Rhodes Scholar national finalist and winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics," respectively-- involved hard work and no short cuts, "Goldman Sachs today," Smith wrote, is all "about the shortcuts and not enough about achievements." Goldman Sachs 2.o, one might say, hasn't worked an honest day in its life and that didn't feel right to Smith anymore. The piece, which was said to come as shock to Goldman, did not please many people on the inside, nor did the $1.5 million deal Smith scored shortly thereafter to write Why I Left Goldman Sachs: A Wall Street Story, out October 22. Here's how Greg's publisher describes WILGS: From the shenanigans of his summer internship during the technology bubble to Las Vegas hot tubs and the excesses of the real estate boom; from the career lifeline he received from an NFL Hall of Famer during the bear market to the day Warren Buffett came to save Goldman Sachs from extinction-Smith will take the reader on his personal journey through the firm, and bring us inside the world's most powerful bank. And while higher-ups at GS may have been initially worried about the potentially damaging revelations that would appear in the book, apparently time, a slap in the face and an order to 'get it together you pustulant milquetoasts' by the ghost of Lucas van Praag has resulted in this delightfully bitchy, exceptionally underminery comment from 200 West: “Every day, some young professional, after a decade in a post-collegiate job, reassesses his or her career and decides to move on and do something else,” David Wells, a Goldman Sachs spokesman said Dealbook in an e-mailed statement. “Others can better judge whether Mr. Smith’s particular career transition is of unique interest.” Regardless of whether or not Goldman is correct in its assessment that Greg's sounds like the story dozens of analyst finishing their first year would tell of the "epic" stuff they witnessed during their 12 months of banking (+previous summer internship, during which things got pretty crazy) or if his particular career transition is indeed of unique interest, Dealbreaker will be hosting an evening of dramatic readings of select chapters, with yet-to-be secured GS alum/raconteur/boulevardier Lucas van Praag standing in for the part of Mr. Smith. Venue and ticket pricing to follow. Former Banker Promises A Peek At Goldman Sachs [Dealbook] Earlier: Resignation Letter Reveals Goldman Sachs Is In The Business Of Making Money, Hires People Who Don’t Know How To Tie Their Shoes; Jewish Ping-Pong Tournament Participant / Sixth-Year Goldman Sachs Vice President Is Looking For His Next Challenge; Goldman Sachs Accuser Greg Smith (Might Have) Lied About That Which He Holds Most Sacred

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