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Posted by on Nov 9, 2009 in Economy | 12 comments

Goldman Sachs CEO: “I’m Doing God’s Work”

There is an article in The Times that truly must be read and put in a time capsule so future generations will be able to get a glimpse of our current society. Focusing on interviews with several top Goldman execs, it is part self justification, part mock hagiography and part, “Let them eat cake.” And that’s not even including the threats!

The “God’s Work” line is in reference to the “social purpose” they serve:

“I know I could slit my wrists and people would cheer,” [CEO Blankfein] says. But then, he slowly begins to argue the case for modern banking. “We’re very important,” he says, abandoning self-flagellation. “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle.” To drive home his point, he makes a remarkably bold claim. “We have a social purpose.”

Letting that slide is the one quibble I have with the article. First, from an empirical perspective, the US crested in the 1970s when it came to job and wealth growth for the average person. Since then the rich — particularly the financial sector — have captured literally all the gains of economic “growth,” which primarily has been a function of increasing debt and easy money rather than prudent investment into the country. But even putting that aside, Goldman is an investment bank in name only. If you look at their quarterly reports, their actual investments are minuscule compared to their trading profits. Sure he said “helping them to raise capital” which could also mean packing up the loans into bonds and selling them off, but again that’s a minor component of their record profits. Not to mention that they are accused of illegal front running when delivering issuances and shorting some of the very issuances that they created. You’d have to be a fool to trust Goldman, as they will (and repeatedly have) twist the knife in the backs of those that they know too much about.

The article also details how Goldman is different than a lot of other Wall Street firms: you are there to get rich as fast as possible and then leave to do “good.” And by “good” they mean secure high level government and financial body positions. They are at all levels in the Treasury, Fed, Exchanges, Congress and SEC.

But no worries:

Goldman vigorously denies that having so many former staffers in top political posts means it receives special treatment. “These people are highly principled,” says Sherwood.

Well then, my mistake.

Although I must say that the writer doesn’t gloss over the aspects of narcissistic sociopathy:

“Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”

So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work”

Like a patient who has survived a near-death experience, for Blankfein the credit crunch has rekindled his innate passion for moneymaking. Talking to him is like talking to a man who has greenbacks, not blood, running through his veins.

And anecdotes about buying boats merely to collect them, as well as setting up private schools only for Goldman employees’ children.

Yet what jumped out at me was something that Andrew Leonard noticed as well:

“I’ve got news for you,” he shoots back, eyes narrowing. “If the financial system goes down, our business is going down and, trust me, yours and everyone else’s is going down, too.”

A gracious reading would insist he was simply stating a fact that we are too intertwined to succeed as a whole if Wall Street goes down. This is true, in a way. But in another way I have to ask, “Do we want to save what we got?” Thirty years of stagnant wages, massive debt based consumerism, the list goes on and on.

The fight isn’t over, it has yet to truly begin. As Rep. Brad Sherman (D-CA) recently wrote:

In my questioning of Treasury Secretary Timothy Geithner before the Financial Services Committee on Wednesday, I focused on the new bailout authority included in the 618-page legislative proposal submitted by the Treasury Department.

In my opinion, Geithner’s proposal is “TARP on steroids.” Section 1204 of the proposal allows the executive branch to use taxpayer money to make loans to, or invest in, the largest financial institutions to avoid a systemic risk to the economy.

Geithner’s proposal reminds me of the Troubled Asset Relief Program (TARP), the $700 billion Wall Street bailout adopted last year, but the TARP was limited to two years, and to a maximum of $700 billion. Section 1204 is unlimited in dollar amount and is a permanent grant of power to the executive branch. TARP contained some limits on executive compensation and an array of special oversight authorities. Section 1204 contains absolutely no limits on executive compensation and no special oversight.

When I asked Geithner whether he would accept a $1 trillion limit on the new bailout authority (if the executive branch wanted to spend more, it would have to come back to Congress), he rejected a $1 trillion limit, insisting that the executive branch be able to respond without coming back to Congress.

I haven’t written about this yet because I wanted to see where it was going. It is impossible to write about calmly, so I thought I would wait and see if it moved forward at all. After all, we are talking about the complete evisceration of the purpose of Congress, and dictatorial powers of the purse. We are in a time where $1 trillion is bandied about as a lollipop, but they are in the game for cake.

I don’t think Blankfein’s comment was a neutral description. I think it is a threat. Behind the veneer of humility there is a volcano of sinful pride and self worship. Charity is not done out of genuine care, but as a PR stunt to whitewash unbridled greed. I don’t think it’s too skeptical to see words about “social value” as just that: words.

When the people in charge convince themselves that they are Gods, then they see themselves not only as indispensable to the very functioning of society, but the root reason for society. At that point, they’d rather see things burn than share power. Former Chief Economist at the IMF Simon Johnson says that we are an oligarchy not unlike those he has dealt with in the emerging world, and said it would not end until there was a massive political push to break the backs of the oligarchs. In an oligarchy, they benefit from crises because people hand them power out of fear…at least until they capture too much of the economy and the masses are left out.

Success comes when anger and justice grow larger than fear, and the oligarchs know it. That’s why they do all in their power to heighten the sense of fear as much as possible, feign mock outrage (often at powerless groups) and drape themselves in the language of justice. And what is more Just than “God’s Work” or more fear provoking than “Everyone else is going down [as well]?”

I would bet that in his lucid moments CEO Blankfein isn’t at the top of the world in celebration, instead he is in a pit of terror.