- Money and Power: How Goldman Sachs Came to Rule the World by William Cohan
Allen Lane, 658 pp, £25.00, ISBN 1 84614 454 X
Of all the Wall Street firms that have been attacked and hated since the financial crisis began, the one that has consistently provoked the most opprobrium is Goldman Sachs. Long before Occupy Wall Street, in July 2009, Matt Taibbi of Rolling Stone called it ‘a great vampire squid wrapped around the face of humanity’. He not only blamed Goldman for the housing bubble, but implied that it had survived the crash only because of its undue influence in high places: Henry Paulson, its former CEO, was Bush’s treasury secretary. Since then the firm has suffered one public relations disaster after another, culminating in a $550 million out-of-court settlement to avoid prosecution for fraud by the Securities and Exchange Commission. William Cohan’s Money and Power: How Goldman Sachs Came to Rule the World is the most substantial of several recent books about the company. Perhaps out of fear of more bad publicity, Goldman thought it wise to co-operate with him, and Cohan has interviewed many company executives, past and present. The result is a history that, unusually, avoids both hysteria and adulation.
Vol. 33 No. 22 · 17 November 2011
As I write, thousands of protesters are marching on the headquarters of Goldman Sachs, yet why should they bother if, as James Macdonald casually asserts, ‘there is some reason to believe that Goldman’s heyday may be over’ (LRB, 3 November)? It’s a strange thing to say of a firm that along with its employees and their relatives donated $1,013,091 to the president’s election campaign, more than all but one organisation in the country – the University of California, which employs more than 150,000 to Goldman’s 34,100. The McCain campaign only got $240,295 from Goldman and its people, placing it fifth among Republican donors, behind Merrill Lynch, JP Morgan Chase, Citigroup and Morgan Stanley. Goldman is still the place where someone like the former White House general counsel Gregory Craig goes to work when he feels he’s done enough to serve the public. Macdonald writes that ‘it seems unlikely that another Goldman executive will be appointed treasury secretary any time soon,’ but maybe having Mark Patterson, one of its former lobbyists, as Timothy Geithner’s chief of staff will do. Sure, as Macdonald points out, Goldman’s share price is down and it has posted its second quarterly loss since it went public. As a result it has set aside only $10 billion for its annual bonus pool, down from $15 billion last year, so the average bonus an ordinary staff member receives will only be $293,255. In the face of such austerity, it is a wonder the bankers aren’t outside their office protesting too.