A New York Times reporter really stuck it to Abby Cohen, a Goldman partner and one of the firm’s most high profile analysts, in an interview published today.
The two go at it for about 10 questions, which we’ll divide into sparring rounds, and we’ll spoil it and tell you that the winner is not Cohen.
The best (worst?) part is when the Deborah Soloman asks Cohen what value high-paid financiers add to society.
Cohen comes up with two things. She says:
Without banks it’s hard to see how businesses would get the money they need to grow and to hire new workers. Let’s not lose track of the fact that most people need to borrow in order to buy a home, and if you don’t have banks, that’s not going to happen.
Her answer is interesting because at face value, those are two of the main duties of commercial banks, and neither of them are central to Goldman’s business.
Goldman Sachs trades the securities of mortgages, which frees up money for banks to give more loans, but it doesn’t loan directly to people. And it loans to small businesses (through a charity program, for example), and it invests in companies, but most of Goldman’s business (and their big paychecks) is brokering trades with/managing other people’s money, advising on IPOs and underwriting mergers, advising investors… surely many more things.
But apparently Cohen thinks the value Goldman adds to society could more or less be done by a commercial bank.
There’s more in this interview, so let’s start at the beginning of the interview/ battle of the words.
ROUND ONE: What can the reporter get Cohen to say about the Goldman/Facebook deal?
NYT: Do you have a Facebook page?
Cohen: No, I don’t. I don’t think we should talk about this. No one here is supposed to be talking about Facebook.
NYT: You’re referring to the fact that Goldman Sachs just withdrew its offer to American clients to sell shares of Facebook, which could violate all kinds of rules.
Cohen: I can’t comment.
Winner: Cohen. NYT got nothing out of her.
ROUND TWO: Cohen has to answer, “what do bankers contribute to society?”
NYT: Do you think it’s ethically justifiable that certain bankers earn $50 million or $60 million a year at a time when unemployment is nearly 10 per cent and income inequality is widening in this country?
Cohen: The income inequality that you refer to is apparent in many different places. You see it in athletics; you see it in entertainment; you see it in your industry as well…
What about the C.E.O. of the New York Times Company?
NYT: What about her? She’s contributing a newspaper to society, which presumably keeps the American public better informed. It has been widely observed that the financial-services industry is not creating a product in the tangible sense.
Cohen: It’s unfortunate that — I think that there is not a good understanding as to the role of financial intermediaries. For example, without banks it’s hard to see how businesses would get the money they need to grow and to hire new workers. Let’s not lose track of the fact that most people need to borrow in order to buy a home, and if you don’t have banks, that’s not going to happen.
Winner: NYT. Goldman Sachs lends *some* money to small businesses, and it invests in companies, but it does not lend directly to homeowners. She clearly doesn’t have a good answer. (Bringing up the CEO of NYTimes’ paycheck was a nice one though.)
ROUND THREE: Are you responsible for the financial crisis?
NYT: Do you feel any responsibility for the economic meltdown of 2008, which you failed to foresee?
Cohen: That’s an odd question to be asking me.
Cohen: I did not think that was part of what we were going to be talking about.
Winner: NYT. Cohen later kind of saves herself, but she totally stumbled, and used a poor excuse of not being forewarned that the questions wouldn’t be easy.
WINNER: NEW YORK TIMES.