That’s what NYMag’s Jessica Pressler asked William Cohan, the author of a new book on Goldman Sachs in an interview recently.
NYMag: They’re the Gwyneth Paltrow of banks, is what I’m hearing?
Cohan: OK. And yes, Americans, we love this sort of thing. We love a narrative where you build someone up and then we tear them down. We’ve spent decades building Goldman up, and now they’re being knocked off their perch.
…It’s at once being pissed off at them and in awe of them. They know if they want the best execution, they have to go to Goldman. It’s like the Yankees. They’re feared, and loved …You envy them and you hate them.
Then Cohan explains what makes Goldman so love/hate-able using the firm’s relationship with John Paulson as an example.
Cohan: And as Josh Birnbaum told me, John Paulson went from being their favourite call, to one of their least favourite calls, because they were basically competing with him to do that trade. Which is prima facie evidence of how Goldman takes the information that its clients share with it, concludes the client is onto something, and constructs a trade themselves, even if it’s not in the clients’ best interests. It’s not front-running, because it happened afterward, but it’s something.
Goldman does things that are “ethically challenged,” he says, and they trade against clients (so you hate them) but they know everything because everyone good, like John Paulson, uses them (so you love them). And here’s how Goldman escapes being hated too much enough to stay famous like Paltrow. They just play dumb about it later.
Cohan: The thing I find most incredible is at the Levin hearing, [Goldman CEO Lloyd Blankfein] basically denies it all. The political environment we live in now is such that he would rather look like they were as dumb as the other firms on Wall Street. And yet the evidence is overwhelming. They didn’t do it nefariously. They did it because they thought they could make money. And they did. I think they made $13 billion pre-tax in 2007.
Now for the real question. Who’s the better actor – Blankfein or Paltrow?