Sunday 24 September 2017

Welcome to vampire bank where greed is good and clients are mere 'muppets'

Goldman Sachs has attracted brickbats and bouquets as one of the world's leading investment banks. In recent years the critics seem to have had the upper hand with allegations of a 'toxic' and 'destructive' corporate culture. We look at the PR disasters at the global institution

In July 2009, journalist Matt Taibbi wrote an article on Goldman Sachs for 'Rolling Stone' magazine that contained the following paragraph: "The first thing you need to know about Goldman Sachs is that it's everywhere.

"The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

"In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates."

The phrase was picked up and used in Congress and by anti-capitalist protesters, and even appeared on T-shirts and posters, much to the detriment of Goldman's image.

Doing God's work

In 2009, Goldman chief executive Lloyd Blankfein told 'The Sunday Times' that being a banker meant "doing God's work". His poorly chosen words naturally caused outrage as they came during the fallout of arguably the biggest recession ever experienced, for which banks were largely blamed.

Tolerate inequality

Lord Griffiths, the vice-chairman of Goldman Sachs International, defended bankers' compensation in 2009 in a speech at St Paul's Cathedral, London.

At the time, public anger over bumper bonuses for bankers was growing as just a year earlier the industry was rescued by the taxpayer.

Fabulous Fab

Fabrice Tourre, a Goldman Sachs trader accused of securities fraud, decided to share his feelings on the US housing market in a 2007 email: "More and more leverage in the system. The whole building is about to collapse any time now . . . only potential survivor, the fabulous Fab . . . standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstruosities (sic)!!!"

Abacus deals

In 2010, Goldman paid $550m (€424m) to resolve Securities and Exchange Commission (SEC) claims that it failed to disclose that hedge fund Paulson & Co was betting against, and influenced the selection of, US subprime property CDOs the company was packaging and selling.

Goldman Sachs, in its settlement with the SEC, acknowledged that marketing materials for the 2007 CDO deal contained "incomplete information".

FINANCIAL SnAKE PIT

A year later, Senator Carl Levin was leading the Permanent Subcommittee on Investigations when it released a report into the causes of the financial crisis.

Mr Levin added that with regards to Goldman, the investigation "found a financial snake pit rife with greed, conflicts of interest, and wrongdoing".

sECRET LOAN

Greece got a secret loan from Goldman disguised as a derivatives deal in a deal that helped the country mask its sovereign debt.

"The Goldman Sachs deal is a very sexy story between two sinners," said Christoforos Sardelis, who oversaw the swap as head of Greece's Public Debt Management Agency from 1999 through to 2004.

lONG-TERM GREEDY

In the 1930s, under Sidney Weinberg, Goldman moved into investment banking to complement its trading prowess.

Weinberg, Goldman's managing partner from the 1930s to the 1960s, summed up the bank's overarching strategy as "long-term greedy".

muppets

Greg Smith embarrassed Goldman and hurt its reputation by his very public resignation from the bank in a letter in 'The New York Times' on March 14, 2012. He painted a picture of a firm that manipulates, ridicules and "rips off" its clients and their needs. He claimed the "culture" and the "identity" of the bank has become "as toxic and destructive as (he has) ever seen it", and alleged managers "sideline" their clients and called them "muppets". On Monday, he publishes his book 'Why I Left Goldman Sachs'.

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