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Goldman Sachs: They've Earned It


It's just doing what good banks are supposed to do.

Editor's Note: Welcome to Love It or Hate It, a regular dual-column feature that will capture the love-hate relationship America has with some of its biggest, most controversial companies. For past columns, click here. For the opposing view on Goldman Sachs, see Goldman Sachs: Amoral and Oblivious.

Goldman Sachs
(GS) should be embarrassed. Not about its financial performance, which is stellar, and certainly not about the billions of bonus bucks resulting from that performance.

What Goldman should be ashamed about is hiring PR firms to help it "spin" its messages to appease critics. Goldman isn't about humility and sheepishness. It's about long hours and kicking arse, quarter after quarter, year after year.

Take a job at Goldman and your job description is this: Work always, play never. Get rich. Go be a Senator or something. That's it.

The firm shouldn't have to explain its work, or its reasons for rewarding employees. When CEO Lloyd Blankfein says Goldman employees are getting nearly $20 billion in bonuses this year because Goldman "does God's work," I suspect Lloyd actually believes it, but I'm not the target audience here. I believe in Goldman. It's Main Street that's his problem.

Goldman needs to silence itself and retreat to the dark catacombs of finance from whence it creates the world. As a business, Goldman is as sweet as a bag of sugar. As a force of societal good … well, they pay a lot of taxes. Deal with it.

It's disturbing to watch Lloyd and crew tortuously trying to make us like them and bless their bonuses. As an organization, Goldman feels no shame, nor should it. Goldman bankers feel smarter than their peers. Better. They did something others couldn't do and they're proud of it.

Of course it's obnoxious. No one roots for Goliath, as Wilt Chamberlain said. But if Goliath were a stock, no one would short it, either.

The truth is, Goldman doesn't see itself as Main Street anymore than Harvard sees itself as DeVry. Lloyd Blankfein will never be "one of the guys." He runs Goldman Freaking Sachs. Every year it culls talent from the top schools in the world, looking for the brightest and the best, then it beats them down to nothing to get more out of them. (See also, Rags to Riches: Lloyd Blankfein)

The survivors of that process may be good people, but that's strictly a fluke. Goldman doesn't want nice. They want smart and ruthless, because that's what wins.

Think Goldman destroyed AIG (AIG)? Think again. Goldman was the first counter-party to figure out how mis-priced AIG's hedges were. Smartly, it then built counter positions of staggering size. When others figured out what Goldman was doing, they jumped on the trade. Suddenly, buying what AIG thought was "insurance" wasn't only less profitable but it was dangerous to the entire financial system. Metaphorically, this makes Goldman more Dr. Oppenheimer than Lex Luther.

In effect, Goldman started the entire cascade but shouldn't feel real culpability. Arguably, AIG would have survived had all the non-Goldman banking banana republics not piled into the trade.
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No positions in stocks mentioned.

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