83 of 86 people found the following review helpful
5.0 out of 5 stars Inside scoop on the "giant vampire squid"
In his now famous - infamous? - Rolling Stone article Matt Taibbi refers to Goldman Sachs as a "...great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells of money." Cohan,whose earlier books gave you the inside scoop on Lazard Freres and Bear Stearns now turns his searchlight on Goldman Sachs, arguably one...
Published on April 17, 2011 by Srikumar S. Rao
21 of 23 people found the following review helpful
3.0 out of 5 stars Interesting read but a bit too long
I have read a variety of books recently about the current financial crisis, the Great Depression, and other crises of late 19th century and 20th century. This is a reasonable addition to that list. The details on the founding of GS, it's impacts over the years on important historical events: Penn Central, LTCM, Bear Sterns, Lehman, AIG, are all very interesting and...
Published on August 1, 2011 by Robert
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83 of 86 people found the following review helpful
5.0 out of 5 stars Inside scoop on the "giant vampire squid",
In his now famous - infamous? - Rolling Stone article Matt Taibbi refers to Goldman Sachs as a "...great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells of money." Cohan,whose earlier books gave you the inside scoop on Lazard Freres and Bear Stearns now turns his searchlight on Goldman Sachs, arguably one of the most powerful financial institutions that ever existed.
It is not really a Goldman "bashing" book but there is plenty of hard reporting that lead one to wonder how Goldman can get away with proclaiming itself to be a temple of team play and a firm where customer interests always come first. Team playing culture? Cohan gives you details about the unusually sharp knives that came out frequently in succession struggles from earlier days - Gus Levy clashing with Sid Weinberg - to more recent events - Hank Paulson ousting Jon Corzine - and paint a picture quite at variance with Goldman PR.
Customer comes first? Cohan reveals that way back in the sixties Goldman was sued for "...fraud, deception, concealment, suppression and false pretense..." in connection with the Penn Central fiasco. Creditors claimed that Goldman "...made promises and representations as to the future (of the company) which were beyond reasonable expectations and unwarranted by existing circumstances." You make up your mind about whether this was a disgruntled customer trying to splash mud or a depiction of Goldman's approach. It certainly was a harbinger of later developments such as the firms disingenuous statement that it was not "betting against its customers" during the sub-prime crisis but merely and prudently managing its risk profile. If you believe that may I interest you in a solid gold brick I found on Fifth Avenue the other day? I will let you have it real cheap because I like you.
Whether you like it or not Goldman executives - past and present - play larger than life roles on a global stage. Cohan gives you engaging details about the real person behind the persona. Did you know that Robert Rubin dropped out of Harvard Law to bum around Europe and persuaded the dean of the school to hold his admission for a year by getting a psychiatrist to testify that he was making a "reasonable" decision?
Cohan does a splendid job of describing how Goldman grew from a small but influential investment bank - and a partnership where the partners were liable to the full extent of their personal net worth - to the titan that it is today with the ability to shake the central banks of major nations and tentacles into the inner political circles of many countries and where Croesus may envy the amount of moolah the senior guys rake in with limited liability.
It is possible, indeed likely, that Goldman is actually the "good guy" in the field in which it plays and that its competitors are far worse in morality and tactics. And that, my friend, is the really scary story.
86 of 96 people found the following review helpful
5.0 out of 5 stars Wow, what a book - EXTRAORDINARY - No Holds Barred - 5 STARS !!!!,
Every now and then, someone comes along and writes a book, and in the process lays out a new framework of understanding with such exquisite detail that the average reader's generalized understanding of how the world works is blown away, and a new understanding becomes the norm. This is EXACTLY what author William Cohan has achieved with "Money and Power: How Goldman Sachs Came to Rule the World."
Such a book was Carroll Quigley's "Tragedy and Hope". Quigley understood how the world worked and the dark forces that can exert undue enormous power behind the scenes. President Clinton in his inauguration speech specifically mentioned the power that Carroll Quigley had over him when he was student at Georgetown and Quigley lectured about those who truly control the world. Clinton understood the power structure, and their assumed ruthlessness, and was forever changed by it. Now we have in Cohan's book the thorough exposure of the less seemly side of Goldman Sachs.
Today there are only two firms that have the cache value to make an MBA's dream of working for them. They are Goldman Sach's in the financial world and McKinsey & Company in management consulting. If you work for either entity, it is the equivalent of having a halo over your head. You are anointed. Goldman Sachs now stands alone as the ultimate financial wheeler dealer in our time. With 35,000 employees, they still manage to be able to cut and slash like an institution a tenth of their current size.
Being a former alumnus of both Lehman Brothers and Bear Stearns, and currently managing several billions of dollars of private money, I have always had the utmost respect for Goldman. I believed then as now that only Goldman could possibly have been better run than either Bear or Lehman. The rest of the players were a joke compared to these three firms.
Now it appears that Goldman was head and shoulders above the other two. I only say this on the basis of survival. No matter how smart you are, if you manage to have your business platform destroyed like Bear and Lehamn, even if it takes a tsunami type event, you simply did not manage well. Goldman demonstrated the ultimate in management style by surviving the financial crisis of 2008 completely intact. Some would argue including the author of this book that perhaps Goldman completely planned the coming debacle to knock out their two arch rivals Lehman and Bear Stearns and have the playing field basically to themselves. Keep in mind that the three of them dominated the fixed income arena for a century.
Back in the old days of the late 1800's and 1900's, German-Jewish firms were not allowed in investment banking, and therefore exploited those areas where they could shine, like fixed income trading. The so called "White Shoe" firms headed by JP Morgan at the top of the list, completely controlled the banking side of the business. Big corporate America would only deal with Christian dominated Wall Street, corporate America was held captive by the big firms. They had a lock on the business. You must read Stephen Birmingham's exquisite book "Our Crowd" for the details of this period. Slowly but surely, absolutely brilliant German-Jewish minds came into Wall Street including but not limited to August Belmont, Felix Warburg, Otto Kahn, Jacob Schiff, and many, many more. They built firms that intellectually were magnitudes smarter and better run than the White Shoe houses like Dillon Read, White Weld, Kidder Peabody, Brown Brothers Harriman and others. Of course JP Morgan stood alone.
Where the German-Jewish firms took off and completely dominated was fixed income, and to this day Bear, Lehman, and Goldman dominated this vast, quiet, non-publicized multi-trillion dollar market, and then with Bear, and Lehman gone there is one left - Goldman. Author William Cohan does an extraordinary and exemplary job of documenting the rise, and dominance of Goldman Sachs. I do not see how this book could have been done any better. I have thought about how to criticize it, where is it lacking, could it have been done tighter (less pages) or better edited. I keep coming up empty. This work is simply superb.
There are 610 pages of superbly written, entertaining narrative spread over 24 chapters. The book reads like lightening. There is not a dull page in the book. If you have read a corporate thriller like the "Smartest Guys in the Room," which is the story of Enron, you will know what I mean by thrilling. If you have any desire to know how Wall Street is really run, about how the world works, and what power is, than you must read this book. Here are just a few things that I found fascinating:
* For 142 years this firm has been the envy of corporate America - its ability to move swiftly from area to area and to cloak its moves has been unequalled. With each generation, Goldman gets stronger and stronger, and more entranched in the financial world.
* The way they manage conflicts, make money, and deal with global power is second to none.
* Goldman can come at you from the short side as well as the long side. They are masters of hedging, and then disguising it. Nobody knew they were hedged during the financial crisis which is why they came out of the crisis unscathed.
* In September of 2008 when Lehman was filing bankruptcy, Goldman had already refinanced the firm with $5 billion of Warren Buffett's money, and another $5 billion raise from the public. They did not need a dollar of government bailout money.
* In October of 2008, they were forced to take $10 billion of government money at the insistence of the Secretary of the Treasury. Less than a year later they would pay it back with interest and buy back the warrants that were issued. For the government it was a 23% profitable annual rate of return.
* You will recall that the government brought legal charges against Goldman for their marketing of the Abacus 2007-AC1 CDO underwriting. They would wind up paying a $550 million fine for this act of greed.
* They also demonstrated to the world during this period that the firm was beyond greedy. They put their own interests and the interests of another client ahead of the clients who were buying the underwriting. Their reputation would never be the same again, but no one served time, and they could easily write the check.
My favorite chapter is entitled POWER which is chapter 13. It is the story of Robert Rubin who would become Co-Chairman of the firm and then shortly thereafter retire from Wall Street to become assistant to President Clinton for economic affairs. Ultimately Rubin would become Secretary of the Treasury in his own right, and establish an illustrious career in government. Do not think about reading any other book on Wall Street until you have read the history of Goldman Sachs by reading Cohan's book. The depth, the insights, the exhaustive research that was done on this book is second to none. I promise you that you will love it, and thank you for reading this review.
21 of 23 people found the following review helpful
3.0 out of 5 stars Interesting read but a bit too long,
I have read a variety of books recently about the current financial crisis, the Great Depression, and other crises of late 19th century and 20th century. This is a reasonable addition to that list. The details on the founding of GS, it's impacts over the years on important historical events: Penn Central, LTCM, Bear Sterns, Lehman, AIG, are all very interesting and enlightening. I was quite surprised to learn many of these details.
I also appreciated the author's relatively objective tone. I came into this book with no particularly strong opinion about whether GS is evil or not and this book didn't really change my mind. However, this book does paint a strong picture of an organization with a lot of conflicts of interest. Given that most of their clients are generally other sophisticated organizations: other financial institutions, large corporations, etc, I find myself surprised that these clients continue to do business with them.
The stories about the various players of the years from Marcus Goldman through Waddill Catching and Sydney Weinberg up to the present day players in Jon Corzine, Henry Paulson, and Lloyd Blankfein are all interesting, to a point. I found many of these mini autobiographies to be way too long & tedious. This book is 600 pages long and I think could have been a much better book at maybe 400 or 450 pages.
That said, if you tackle this book, the payoffs come later. Skim some of biographies and you'll be rewarded with interesting details about GS's involvement the Penn Central crisis, the LTCM crisis, and how GS had concluded that a mortgage meltdown was coming way ahead of a lot of other players and took actions to both protect themselves and profit from it. Their decisions on how they marked their assets to market while other organizations resisted are very enlightening.
In addition to learning a lot about GS, my biggest takeaway (and to be clear, i don't think the author was suggesting such) is that most of the federal bailouts were unnecessary and counterproductive. In my opinion, these bailouts only ended up honoring a set of bets between sophisticated economic actors. If the Feds had not bailed out Bear Sterns, AIG, etc, a lot of the existing investment firms would have likely gone belly up. So what? Other firms with more integrity and better risk management would have come along to fill the void. And we'd all be better off. As it is, we still have most of the same players in place and they all know that if they act badly and suffer losses, the Federal Reserve and the Treasury department will be there to cover those losses.
25 of 32 people found the following review helpful
5.0 out of 5 stars Money and Power is POWERFUL READING,
For anyone who is looking for a balanced and in-depth understanding of the financial world, and the role Goldman Sachs has played in it over the past 100 years, Bill Cohan's riveting new book is a must-read. Without a doubt this book deleves into a fascinating history and ends with an up-to-the minute account of jsut what Goldman is today. Superb!
13 of 17 people found the following review helpful
5.0 out of 5 stars Miscarriage of Justice on Wall Street,
Wall Street is the symbol of power and wealth in America where smart entrepreneurs make millions of dollars on risky bets in the equity and fixed income markets. Money and power are the driving forces on Wall Street, for good - or for evil. As we have seen in recent years, scoundrels can (and have) take control of our capital markets. In the hurly burly world of Wall Street, justice is a rare commodity.
A new book about Goldman Sachs, one of the leading investment houses on Wall Street, enlightens us on the workings of one of our most important financial institutions. The book is titled MONEY AND POWER: HOW GOLDMAN SACHS CAME TO RULE THE WORLD, and its author, William D. Cohan, provides us all the details -- good, bad and otherwise -- of how Wall Street works. Cohan's book tells a fascinating story of heroes and villains in the pantheon of the American capitalistic system.
One chapter in Cohan's book, in particular, brings a long overdue measure of justice to one of the victims of Wall Street. The victim was Goldman Sachs partner Robert Freeman, whose life was changed forever on Feb. 12, 1987 when an assistant U.S. Attorney abruptly arrested him on alleged charges of insider trading. Freeman was innocent of the charges, according to Cohan, but his experience highlights the risks posed by the old freewheeling trading activities on Wall Street - as well as improper performances by then U.S. Attorney General Rudolph Giuliani and reporter James Stewart, who was then working at the Wall Street Journal.
But there are many other highlights in this book that provide some sunlight on Wall Street. We learn about the major GS leadership (founder Marcus Goldman, Sam Sachs, Sidney Weinberg, and onward to his son John Weinberg, John Whitehead, Steve Friedman and Bob Rubin, Jon Corzine and Hank Paulson, as well as current CEO, Lloyd Blankfein).
Cohan brings us up to date on Goldman's triumphs and travails. Initially Goldman Sachs profited from the influence of its founding partners. But by the second half of the 20th century, things had to change. Whitehead, for example, drags the firm into the 20th century by stressing the creation of new business and customer service. Rubin and Friedman stressed the firm's trading operations when billions were made in profits on just smart trading in the equity, fixed income and commodity markets. They also brought in additional capital from outside investors who acquired ownership of 20 per cent of the firm. Public ownership was broadened in 1999 when Goldman issued an IPO -- which transformed the company further.
Goldman's historical warts included its dismal record in treating its female employees who suffered form all sorts of sexual harassment and abuse.
But perhaps the most damaging era in Goldman's history was its record in creating and dealing mortgage-backed securities (MBS) that led to the financial crisis of 2007-2009. This period is, necessarily, still incomplete because of ongoing litigation (Goldman has already paid $550 million in fines and faces the prospect of further charges by federal regulators). Goldman was not alone in this sordid story involving housing finance, but it made billions of dollars off of highly questionable synthetic and derivative securities that it had created for its own profit motives. Cohan does an excellent job in relating this sorry record of finance, but since the saga is not yet complete, Cohan's book is necessarily incomplete in this area of finance.
The Freeman saga is also not complete, but Cohan goes a long way towards bringing closure to that sorry episode - sorry from the standpoint of government regulation and the American financial press.
Freeman was the victim. The villains, according to Cohan, were a trio of vain, self-centered, ambitious men: U.S. Attorney Rudolph Giuliani, who was being driven by his political ambitions; journalist James Stewart, a reporter at the Wall Street Journal who served as Giuliani's public mouthpiece; and Martin Siegel who was, by his own admission, a crooked investment banker who already had a covert relationship with Stewart, feeding the reporter with tips on impending mergers and takeovers.
In the mid-1980's, Giuliani was increasingly cited as a potential candidate for Mayor of New York (he was to lose his first try in 1990 to David Dinkins), and to further his political ambitions, he cooked up a phony scheme under which he could be seen as taking down a partner in one of Wall Street's most prestigious firms. He launched his scheme on Feb. 12, 1987 when he sent one of his deputies to arrest Freeman right off the Goldman trading floor. There was no credible evidence, no indictment and no grand jury. Freeman's arrest (and that of two other traders at Kidder Peabody) was simply a concocted event, based on lies by the crooked Siegel (who had been receiving suitcases full of money from convicted inside trader Ivan Boesky).
"In truth ... Siegel's specific allegations against Freeman and his two former Kidder colleagues were pure fiction," writes Cohan. "But by the time anyone bothered to figure that out, Freeman's career was over...."
Giuliani justified his concocted event by feeding his version of events to Stewart, who duly published the insider details in the Wall Street Journal. Alas for Giuliani, the case began unraveling within days of Freeman's arrest."
Two months after Freeman's arrest, a grand jury did issue an indictment, but even that belated document did not last long. A few weeks later, Giuliani withdrew the original indictment, promising a new one. It never came. Two years later, Giuliani resigned his office to run for mayor of New York. During those two years, Giuliani justified his actions by continuing to leak information to Stewart - published information that later proved to be simply wrong. Ironically (and pathetically), Stewart (and his colleague, Daniel Hertzberg) won the Pulitzer Prize for their incorrect, unethical reports that were based on leaks from Giuliani and access to supposedly secret Grand Jury deliberations (in violation of the law).
Giuliani kept Freeman in limbo for two years, without bringing any formal charges. Freemen voluntarily underwent five lie detector tests (all of which he passed). But even without formal charges, Freeman was under pressure. Giuliani's successors started talking about using the RICO (Racketeer Influenced and Corrupt Organizations Act) law to convict Freeman. The RICO statute is a broad-based law that allows law enforcement wide latitude to convict racketeers, and seize their assets. The statute was used to convict the Princeton Newport firm, headed by Freeman's close friend, Jay Regan. That verdict (which was subsequently overturned) convinced Freeman that he didn't stand a chance if the prosecutors came after him under the RICO law; in that case, he would be in limbo for years - with the potential loss of his family fortune - leaving him in prison and his wife and children penniless. Two weeks after the Princeton Newport verdict (but before the verdicts were overturned), he reluctantly authorized his lawyers to negotiate a deal to end his ordeal, pleading guilty to a single count of mail fraud involving a highly questionable charge
Giuliani, at least, had the temerity to admit that the case against Freeman was wrong. In a walking tour in 1989, as he ran for mayor, Giuliani told reporters: "It was a mistake to move that case at the time that I did and - to the extent - I should apologize to them."
Stewart accepted his Pulitzer Prize without so much of a flinch of embarrassment over his unethical behavior. Even though he was a trained lawyer, according to Cohan, he had published secret grand jury testimony (in violation of the law) and used a convicted embezzler (Siegel) as a source of false information that he published in the Wall Street Journal. To its credit, the Wall Street Journal published several editorials that condemned Giuliani's behavior - and by inference, its own reporter, Stewart (Stewart was just recently hired by the New York Times to become the newspaper's financial columnist).
Belatedly, the news media came around to the realization that Giuliani and his cohorts had screwed Bob Freeman:
Said the Wall Street Journal the week after Freeman ended his ordeal with a plea bargain:
"Rudy Giuliani promised new indictments in `record time' and asserted that the original charges were just the `tip of an iceberg.' Last week, the iceberg turned out to be an ice cube, and even it melts under close scrutiny."
Said The Daily News:
"The government's behavior in that case reflects what many defense lawyers have called a display of sloppiness and arrogance that has needlessly ruined careers and reputations in the government's anti-fraud crusade."
Newsday called Freeman "the Willie Horton of Rudolph Giuliani's mayoral ambition." Wrote Robert Reno: "They could never find anything on the guy they handcuffed, but not to be left looking entirely like a bunch of loutish brownshirts, federal prosecutors scratched around for two years, combed the details of Freeman's existence, and found a wholly unrelated charge to which it was conveniently arranged for him to plead guilty...in Robert Freeman's martyrdom all of us were brutalized by Handcuff Giuliani."
Cohan's book is the first to really detail the ordeal of Bob Freeman, and Cohan should be commended for doing so. As for Freeman himself, he served his four months in prison, and since then he has lived a private life for the last 20+ years, trying to cope with the exploitation he experienced at the hands of a politically-driven prosecutor. Cohan gives him a well-deserved chapter in his excellent book. Someone, someday, ought to devote an entire book to this miscarriage of justice.
Disclosure: the writer was a boyhood friend of Bob Freeman and remained in touch with him throughout his ordeal.
3 of 3 people found the following review helpful
5.0 out of 5 stars The Hits Just Keep On Coming,
This review is from: Money and Power: How Goldman Sachs Came to Rule the World (Paperback)
I would say Bill Cohan is THE most interesting financial writer of the day. I have read all three of his books in addition to his constant stream of interesting pieces for Bloomberg, FT, Vanity Fair etc. His formula is a proven one - deep research and understanding of the subject matter, an amazing capacity to get primary interviews from key players and then the ability to wrap it up in a sharp and engaging writing style. The end result is a compelling "you are there" narrative, knit together by equal parts history, business, culture and human drama. This latest race through the history of Goldman Sachs is no different and is perhaps his best book yet.
Other reviewers have noted many details on the book so no need to replicate - but I was struck by a few things. I absolutely loved the image of a young Marcus Goldman walking around New York with a stack of discounted notes in his top hat - trading here and there and then depositing at the bank at the end of the day. Talk about a guy who knew what his trading positions were! Ironic that it all ends with synthetic CDOs and derivatives trading at warp speed on ultra high speed computer networks - where no one is really quite sure what is going on exactly. I also relished the contrast between the depiction of Goldman as the ultimate team player culture with a never ending series of palace coups and family struggles. Finally, the depiction of Goldman's "big short" position while simultaneously loading up customers with truckloads of the same stuff was just hard to fathom. On one hand you could say it's a "free market" and people can buy or sell what they want - but this was truly egregious and in the end, unethical to say the least.
I would caution some readers that parts of the book are somewhat technical - especially the last section around the mortgage trading debacle. I suspect even Cohan knew as much, because whenever it feels almost too technical up pops a salacious email from the "Fabulous Fab". We know from the book that in additon to his problems with the SEC, there are at least 2 women not happy with the Fab.
In sum, another first rate effort from Cohan. I can't wait for his next one.
2 of 2 people found the following review helpful
4.0 out of 5 stars Greed Must Still Be Good,
After reading this book, I am not sure how Goldman Sachs has any clients left. Money and Power: How Goldman Sachs Came to Rule the World is the history of this white-shoe firm from its inception through 2008. As the investment bank that other firms aspire to be, this book is a peek behind the curtain of how Goldman Sachs really operates.
In the late 1970s, a partner named John C. Whitehead developed the "14 Principles" that purportedly guides the company still today. The first principle, "Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow" is laudable, but now laughable. [Note: I plugged this principle into Google and it is amazing how many companies have copied it word for word as part of their core values or principles.] There is evidence throughout the book that this was not true, as Goldman's clients were duped throughout history, but never more so than during the financial crisis of 2008. In many meetings detailed in the book, the clients were not even mentioned and when they were, the discussion was more toward how Goldman could make as much money from them as they can. The mission of Goldman seems to me to be that it is not sufficient to beat everyone--competitor, partner, client--in the great game of the financial markets, but, in the case of partners and competitors, to destroy them.
I still do not understand how it can be legal to trade on information gleaned from nonpublic client or potential client information.
The first three quarters of the book when it describes the early history of the firm reads more like a novel and the part that I found the most interesting. The latter part of the book that depicted events leading up to the Great Recession, I believe, did not flow as well and that may be due to the author having access to actual written conversations via email, many of which were included in the book. There was also the issue of dealing with the alphabet-soup of financial products: CDOs, CDOs squared, CMOs, ABSs, SIBs, ad nauseam.
Subsequent to reading this book, I read an article of why clients stick with Goldman. The first reason is that Goldman is viewed as the best and many CEOs and CFOs wish to be associated with the best. Another reason, and the one I found most interesting, is that since the tenure of CEOs and CFOs of Fortune 500 companies is short, clients do not have the institutional memory and may not realize or care how Goldman has treated them in the past.
Greed helps to forget.
Overall, this is a well written and fascinating book and I highly recommend it.
2 of 2 people found the following review helpful
5.0 out of 5 stars An evenhanded history, with insight into the unseen hand that drives the Masters of the universe,
The book is organized as a history, beginning with Marcus Goldman's arrival in Philadelphia and moveto New York. Cohan offers a convincing description of business in the era of the robber barons. Goldman of course was no robber baron - he was just a clever Jewish guy good at being the middleman - but his shrewdness in buying and selling commercial paper made him a wealthy man. The business also exposed him to the same kinds of moral dilemmas which face the business today. As an agent, did he have any responsibility for bogus promissory notes that he had brokered? It is similar to Goldman's much more recent problems with the ABACUS transactions in the housing meltdown.
The history of Goldman Sachs is a history of strong personalities and extraordinary ability. The story that the author conveys is that Goldman's uniqueness is in its ability to raise up incredibly capable people and to bind them to the company with an unusual degree of loyalty. It has done this by establishing ethical principles - sometimes honored in the breach, a very elaborate hiring process and a similarly rigorous system for pushing deadwood aside, partners included, and a system for providing outsized rewards.
Although Goldman and Sachs were Jewish, the firm was headed by ambitious Gentiles as early as the 1920s. The author speaks of the firm's DNA, which would seem to reflect Jewish cultural values, but it is clear that the firm is quick to recognize those values in people regardless of background. Recent presidents Jon Corzine and Hank Paulson were Gentiles from the middle West; Bob Rubin and Lloyd Blankfein happen to be Jewish. Blankfein is an archetype - a kid from a hardscrabble background who found his way into Goldman via the back door, but his talent could not be denied.
The book analyzes the tensions and moral issues facing Goldman itself and any Goldman employee. People are attracted to the firm by ego and ambition - it is known to be a place where you can make a great deal of money quickly. It is a crab pot of alpha males, ego confronting ego on a daily basis. The money becomes a marker, and this is the problem. Once one achieves a certain level of success, enough money to live well is no longer an issue. It is generally a competition in acquiring the trappings of great wealth, though there are exceptions. According to Cohan, Hank Paulson is one of those exceptions, and he spends a lot of effort analyzing Paulson's motivations, especially in contrast with John Thane and John Thornton.
In this era of Occupy Wall Street and other similar movements, this book should be a valuable background. The key players that Goldman are not born evil, but rather prisoners of the system, or you might even stretch to say victims of the system. There is no doubt that much of what they did is morally questionable, and certainly damaging to the economy. In writing legislation to attempt to right the situation one should understand the motivations of the players. Cohan analyzes them very well.
As an afterthought, Cohan's description of the way Jon Corzine ran Goldman should have made anybody wary of investing with him. Apparently history repeated itself in a spectacular way, as Corzine's lack of oversight led to the bankruptcy of MF Global, with $1.2 billion of client funds unaccounted for.
4 of 5 people found the following review helpful
5.0 out of 5 stars A Tremendous Public Service,
During the 2008 sub-prime economic meltdown, as all of Wall Street was crumbling around it, Goldman Sachs was just minting money. Goldman Sachs had created risky securities that packaged the worst of the sub-prime mortgages (the ones that were most likely and would be the first to default), sold them to clients by praising the securities to the sky, and made huge bets against the securities. Besides outright fraud, Goldman Sachs also made easy money by securing confidential information by underwriting IPOs, and then using this information to make trades (insider trading).
Protecting and facilitating Goldman Sachs' predatory money machine are the Goldman alumni scattered throughout government, regulatory offices, and corporate America (most notably, Hank Paulson at the Treasury and John Thain at the NYSE). When the American government bailed out the failing Wall Street banks, Goldman Sachs was the first in line to receive its proceeds from their bets, and they received every penny. To this day, Goldman Sachs denies that it was actively betting against the subprime market that it had helped to create, and instead was just "hedging."
Goldman Sachs became Goldman Sachs because of the collective hard work and sacrifice of its founding partners. It was Jewish and it was a meritocracy, and thus attracted the brightest and most diligent. Its partners had a fanatical loyalty to the place and the Goldman way, but eventually, like all great organizations, greed and power politics came to the fore. In the most Machiavellian manner possible, Hank Paulson engineered a nasty take-over from Jon Corzine, and then maneuvered out John Thornton and John Thain, his palace coup allies.
Goldman Sachs once prided itself on its long-term, enlightened greed, but nowadays there's only short-term, blinding greed. There's something at once both shameless and malicious about Goldman, and William Cohan's arduous study of the great enterprise vindicates all the public vindictiveness against Goldman.
1 of 1 people found the following review helpful
4.0 out of 5 stars Juicy Inside Stories of a Great Investment Bank,
This review is from: Money and Power: How Goldman Sachs Came to Rule the World (Paperback)
A very detailed but interesting history of Goldman Sachs. When a 600 page book can keep your interest right through its entire reading, you can be sure you are in the hand of a masterful writer. My only complaint is that the writer skims over details on most of the financial innovations Wall Street thinks up to increase its earnings. The writer probably does that to keep the book interesting but readers will be left mystified. If not for the excellent book, All the Devils Are Here by Bethany McLean and Joe Nocera, I would have found the later portions of Money and Power frustrating as they deal with the confusing world of derivatives. I think writers should not underestimate the capability and interest of their readers, especially those who would spend their time reading 600 pages about an investment bank.
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Money and Power: How Goldman Sachs Came to Rule the World by William D. Cohan (Paperback - January 10, 2012)