Today, the New York Times ran a piece by Business writers Gretchen Morgenson and Louise Story entitled “Clients Worried About Goldman’s Dueling Goals,” which was spurned by the SEC’s recent investigation into the investment banking “vampire squid” in which Goldman Sachs screwed smaller clients for the sake of a very big client! Goldman’s people read the article, and – like anybody who has ever had anything written about them they didn’t like – feel like they were “misrepresented.”
So Goldman Sachs got to blogging. And posted the entirety of their interview with the New York Times, emboldening the portions of the quotes they gave the New York Times that the Times used, with the intent of showing how they were in fact “misrepresented.”
Unfortunately, this does nothing to the story but provide more context for an interview in which Goldman comes out looking terribly. For example, emphasis theirs:
Q. In addition to the 14 principles, former employees contend that there is an additional, unwritten principle urging workers to embrace the conflicts of interest inherent in the firm’s business model and to consider such conflicts to be part of a healthy tension between client and firm. Could you comment on this?
A. We’re not aware of this so-called “unwritten principle”, but every large financial institution, in fact virtually any business in any industry, has potential conflicts and we all have an obligation to manage them effectively.
And that changes this how, exactly? If anything, the entire interview is an illuminating document into just how spin-ready whatever anyone at Goldman says is. Another example that wasn’t used in the Times piece, about the credit default swap insurance they took out on AIG failing.
The set-up: imagine, for a moment, your government telling you that you didn’t really need to know there was an alien invasion coming to enslave and kill us until after we’ve been enslaved by said aliens (because they didn’t think the aliens were out to kill us, and also, wanted to make money off of them). You’d be pissed, right?
Well, imagine being a Goldman investor today – or an American with money to lose! – and watching how Goldman tries to define what’s “material non-public information.” Emphasis theirs:
Q. Goldman has said that it bought CDS protection on AIG to protect itself if the insurer failed. Goldman purchased this protection when it had information about margin calls it was making on AIG and which AIG was resisting. Did Goldman tell the counterparties from whom it bought the CDS protection on AIG about the margin call information Goldman had on the insurer? Does Goldman feel that there were any conflicts involving its purchase of protection on AIG at the same time that it had nonpublic information about the insurer’s financial position?
A. The premise of the question is wrong: we did not have material non-public information about AIG’s financial position. We had a series of disputes with AIG about the valuation of assets for which they were providing protection. That is quite different from having material non-public information about the financial condition of the company.
Also, if we had told another counterpart about our dispute with AIG, we would have been violating the confidentiality obligation we had to AIG.
And that’s misrepresentation how, again? If anything, this serves to illustrate even further the kind of complete state of cognitive dissonance Goldman’s corporate culture revolves around.