From the best-selling, prize-winning author of The Last Tycoons and House of Cards, a revelatory history of Goldman Sachs, the most dominant, feared, and controversial investment bank in the world.
For much of its storied 142-year history, Goldman Sachs has projected an image of being better than its competitors - smarter, more collegial, more ethical, and far more profitable. The firm - buttressed by the most aggressive and sophisticated PR machine in the financial industry - often boasts of "The Goldman Way", a business model predicated on hiring the most talented people, indoctrinating them in a corporate culture where partners stifle their egos for the greater good, and honoring the "14 Principles", the first of which is "Our clients' interests always come first."
But there is another way of viewing Goldman - a secretive money-making machine that has straddled the line between conflict-of-interest and legitimate deal-making for decades; a firm that has exerted undue influence over government since the early part of the 20th century; a company composed of "cyborgs" who are kept in line by an internal "reputational risk department" staffed by former CIA operatives and private investigators; a workplace rife with brutal power struggles; a Wall Street titan whose clever bet against the mortgage market in 2007 - a bet not revealed to its clients - may have made the financial ruin of the Great Recession worse.
As William D. Cohan shows in his riveting chronicle of Goldman's rise to the summit of world capitalism, the firm has shown a remarkable ability to weather financial crises; congressional, federal and SEC investigations; and numerous lawsuits, all with its reputation and its enormous profits intact. Cohan has constructed a vivid narrative that looks behind the veil of secrecy to reveal how Goldman has become so profitable and so powerful.
©2011 William D. Cohan (P)2011 Random House
After seeing the title and hearing the author interviewed on the Daily Show, I almost didnt buy it. I expected it to be an over-simplistic scape-goating of a very complicated financial crisis on one institution that has done things to make itself an easy target. Listening to the introduction reinforced my fears and, if I hadnt spent 2 credits, I might have given up at the end of the introduction.
But, the heart of the book is very-well researched and gives an incredibly textured picture of many of the events it describes. The 1st 3 parts deal with the history of Goldman up until the recent financial crisis. if you are a major Wall Street history buff and have read the memoirs of the key players & other Goldman histories, a fair amount of this might seem repetitive. But, if you are a normal human being, Cohan offers a very well-written narrative of the firm's history that would require you to read a number of other books to get elsewhere.
The 4th part deals with the current (recent?) financial crisis. Despite the title and the intro, it does a great job detailing Goldman's role and showing how many of the things Goldman did limited the magnitude of the crisis and, in fact, represented best financial practices. The reason they made so much money is that almost no one else was behaving rationally. Goldman was early to understand the house of cards on which CDOs rested and they marked their assets accordingly. Though often blamed for causing the crisis, this actually had the effect of holding Wall Street back from even greater irrational exuberance which would have led to an even bigger crisis down the road. Sure some Goldman individuals may have engaged in specific questionable activities, and Cohan doesn't ignore this, but Cohan does a good job of showing how weak the causal relationship between a couple shady decisions and the crisis really is.
The real scandal is that everything Goldman did was LEGAL and Cohan's book gives a textured picture of that.
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