The latest “Goldman [appears to be] behaving badly” incident reflects either uncommon boneheadedness (the only question is whether by an employee or the firm itself) or a very clever ruse to further discredit the reputation-challenged bank.
Well-known British film director/producer/screenwriter Richard Curtis (Four Weddings and a Funeral, for instance) and actor Bill Nightly started a campaign for a Tobin tax on banks, which they rebranded as a “Robin Hood tax”. In addition to securing the support from a variety of organizations, they launched a video and an internet poll to show that the public would favor the idea.
At 3:41 PM, “no” votes spiked suddenly, rising from 1400 to 6000 in less than twenty minutes, which. The site’s technical staff tightened security, investigated, and determined that nearly all the votes in the surge period came from two computers….and as the Times Online explains:
one privately-owned and hard to trace, the other, it is claimed, registered to a computer at Goldman Sachs…
Internet experts said that the act was sabotage, as the culprit would have to create a special computer program in order to register so many votes in such a short space of time. They also said it was possible, though unlikely, that the campaign had fallen victim to an elaborate hoax, as it is possible to mask the true IP address and make it seem as though a hacker came from elsewhere.
Yves here. Now of course, assuming this cute move originated from Goldman or its staff, it has backfired impressively. It has not only garnered more free press for a idea that the banking industry is not keen about, but (yet again) features Goldman in an unfavorable light.
And before you say, “Goldman isn’t THAT stupid, this had to have been an employee with lousy judgment,” it is still remotely possible that this ploy did have someone in the officialdom backing it.
Consider the case of Christian Curry. Curry was an analyst in Morgan Stanley’s real estate department. He was fired almost immediately after nude photos of him appeared in a gay magazine, although when Curry sued for wrongful termination, Morgan claimed he had engaged in expense account fraud (I dimly recall the particulars, and even at that stage, Morgan Stanley was already looking inept. Curry said the firm was contesting him having been reimbursed for visits to strip clubs. Curry said it was on client business and that sort of thing was routine at Morgan Stanley. Oh, and before readers wonder why a young staffer would be charging client-related entertainment to his company, it’s part of the culture at most firms that the most junior person picks up the tab for wining and dining, to relieve the senior person of the nuisance of submitting the paperwork. If I were Morgan Stanley, I would not give someone cause to do discovery on whether other staffers had been reimbursed for expenses at adult entertainment venues).
Then the dispute took a bizarre twist. Per the Time Magazine:
Several months after he left Morgan Stanley last year, the Columbia University graduate was arrested for paying undercover police $200 to plant racist e-mail messages in the Morgan Stanley computer system. The alleged motive was to bolster a planned discrimination lawsuit. Yet last week the New York district attorney’s office dropped the charges after discovering that just days after Curry’s arrest, Morgan Stanley officials had paid $10,000 to an informant working with the same undercover police who busted the young analyst.
One problem: nobody will explain what the $10,000 was for, but it was enough to make the D.A. rethink its case against Curry. Now Morgan Stanley is under investigation.
The denouement? Morgan Stanley hired an outside firm to conduct an investigation, which found no laws were broken. But the general counsel, who authorized the payment, resigned.
Now I’m no expert, but this sure looked like an attempt at entrapment to me (it was the informant, a school friend of Curry, who suggested the idea of planting the e-mail messages). And the Morgan Stanley general counsel went as far as seeking outside opinion from Davis Polk on the ploy:
Sonnenborn [the general counsel] understood from the lawyers that the payment as a reward for Luethke’s information would be legal if the informant was not to be a witness in the Curry case..
So get this: it’s OK if Morgan Stanley uses the “information” to get him Curry arrested and support their case, just as long as the “informant” does not appear in court. The Manhattan District Attorney’s office was not too happy when they learned about this angle, which led them to drop the case against Curry and start investigating Morgan Stanley.
Curry is hardly a sympathetic figure, but Morgan Stanley managed to come out the loser on the PR and monetary front. Morgan Stanley claimed it paid the junior staffer nothing, but the counter-evidence was awfully loud:
But try as Morgan Stanley might, its public claims have been belied by the recent transformation of Curry from social pariah to Richie Rich. The party started the week of the settlement, when Curry arrived at a victory dinner at Harry Cipriani in a limo strewn with rose petals; it built steam as he bought two Ferraris, a Porsche, a Range Rover, and a Mercedes; and it’s still on in mid-January, when he arrives at Le Cirque 2000 with his 23-year-old assistant, Stephanie, and publicist, David Granoff, whose other famous client is Anna Nicole Smith. “The last time I came here was for a Morgan closing party,” Curry says with a smirk.
After settling in a purple velvet banquette — “best table in the house,” Granoff observes — Curry gazes around the fairy-tale room, smiling happily. He sips a kir royale, peruses the menu (“What’s halibut?” he asks), and orders tub after tub of caviar. “I’ve never had caviar,” confesses Stephanie. “It’s one of those little-kid things — I always said I wouldn’t eat it.”…
But there is one topic about which Curry loses his cool: “People are saying, ‘This guy Curry, spoiled little bitch, never worked a day in his life, and now he’s a multimillionaire,’ ” he snarls. “Well, bullshit! I’d never go through that again, whether they paid me zero dollars” — and now he speaks very, very slowly — “or $52 million.”
So — hypothetically speaking, of course — what, exactly, does a 26-year-old guy do with, say, $52 million in cash and stock?
Yves here. I’m not saying Goldman did anything remotely this stupid (first firing someone over photos in a gay magazine, the protestations to the contrary, without preparing a credible case for another reason first, then compounding the error with overzealous moves). But while Goldman has long been careful about staying just this side of the letter of the law, it has revealed itself to be remarkably tone-deaf as far as the court of public opinion is concerned (and that is saying something, given the generally appalling performance of the industry.
That’s a long-winded way of saying that given that the ballot box stuffing was not illegal, it does make it conceivable that someone in the officialdom at Goldman signed off on this childish stunt.
Update: Swedish Lex, who was kind enough to point me to to l’affaire Robin Hood Tax (boy, does that not roll trippingly off the tongue), made a comment in passing (in Links yesterday) about my “Goldman Sachs issues,” so I thought I might clarify matters a tad.
First, this blog is news-driven, so if Goldman is getting a lot of headlines, Goldman will get a lot of coverage in the blogosphere, including here. One could equally well describe me as having Timothy Geitner issues from the moment he opened his mouth as Treasury Secretary.
Second, for the record, it isn’t so much Goldman issues as “investment banking/capital markets firm” issues, but Goldman has made itself the poster child by asking for it, particularly Blankfein’s statement re doing the Lord’s work. And its staffers have made even more stunning remarks that have gotten less play in the US. From a November post:
“The injunction of Jesus to love others as ourselves is an endorsement of self-interest,” Goldman’s [Brian] Griffiths said Oct. 20, his voice echoing around the gold-mosaic walls of St. Paul’s Cathedral, whose 365-feet-high dome towers over the City, London’s financial district. “We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.”
Yves again. This is the most brazen example of Newspeak I have ever seen. The remark Griffith cited is against self-interest, it’s a clear and well known instruction to put other people’s interest on the same footing as your own, to be at least fair, if not to go out of your way to be fair. But all Griffiths pays attention to is the self love part, ignores the rest, and acts as if he can brazen his way into getting others to buy his obviously warped reading.
I think they must put something in the water at Goldman these days. The firm seems to be incapable of reasoning any more, and instead reverts increasingly to patent examples of self-serving, intelligence-insulting palaver, which to anyone with an operating brain cell looks narcissistic. Not only is the only thing that matters is what is good for Goldman, but the people at the firm are so deeply inculcated that they assume that the rest of the world recognizes their superiority and privileged claim on everything, so they no longer even bother indulging the idea that other people might have rights too.
Back to today. By contrast, John Mack took no bonus for the last three years running. JPM was no where near as solid during the crisis as they are generally perceived to have been, but Dimon also has the sense to not make as ridiculous pronouncements as the GS crowd has. Ken Lewis, John Thain, Dick Fuld, and Jimmy Cayne got their comeuppance, Pandit is being forced to partially dismantle Citi.
So my emphasis on Goldman isn’t simply its conduct (the whole industry has set out to feather its nest, please) but the fact that it is so convinced of its superiority and deservingness (not a word, but you get what I mean) that its intransigence manages to be worse than the rest of the industry. The place clearly was a cult when I worked there briefly, more than 25 years ago, and more recent accounts suggest it is even more so now. Cults are remarkably effective forms of organization, in that they motivate staff to make sacrifices and tolerate boundary violations that most people would not tolerate. But they are remarkably poor at admitting not just error, but any input that threatens their belief system, which rests on an assumption of specialness and privilege. As a result, Goldman not only so clearly and visibly doesnt’t get it that they demand to be whacked, but it will take an extraordinary amount of denigration and pushback for any negative information to penetrate.
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I have no problem with you taking shots at Goldman or any of the other IBs or IBs in banks’ clothing. I look upon them the same way I would view any organized criminal organization. I have said many, many times that companies like Goldman simply shouldn’t exist. They contribute nothing to our society and take away much from it. They are not the future of finance but a deadend. Their continued existence is not a sign of economic recovery but the persistence of the disease which very nearly brought our economy down once and will likely do so again. Goldman is not the canary in the coal mine but the vulture on the roof. This type of corporation is not reformable. They are made up of players whose lives and careers have been built on gaming the system. It is all they know and all they will do. The damage they do is vast and they will do more. Our society cannot afford their further depredations. They must go but will not until our country is well and truly in depression.
So very well said. This stuff resonates with reason and an instinctive sense of right/wrong and justice, but its going nowhere.
Is there any sense at all that reform can be driven by what’s right? Personally, I have zero faith that any meaningful anything can come from any leadership entrusted to do the right thing for the many.
Sacrifice is gone from our vernacular. It’s been made to be synonymous with suffer. There is a difference.
Well put. We actually live in a society governed and abused by criminal companies not that different from GS. Big Pharma, health care insurance, the real estate 6% mafia, gas companies and many more are all criminal enterprises; they all enjoy huge profits that are mostly outrageous. Some of these companies, e.g. Pharma and Gas do provide needed products while GS and its siblings, the health care insurance industry and most of the real estate mafia are simply redundant.
It seems that the solution to this travesty is Abolition (II) that eliminates these companies or their ability to suck us dry.
(Rant inspiring stuff. Permit me:)
I agree with all of the above and am likewise very doubtful that effective reform can come from within a system which is basically criminal at a structural level. The trumpeted idea of a “free market” is a manipulated joke and always has been, whose real victims are those who don’t get that it’s a joke, a game. The whole “law of the jungle” mantra, the Selfish Gene Meme, the “kill or be killed” bullshit is an infection, its chorus leaders the (sometimes unwitting) carriers of the virus that will destroy its host.
By definition therefore, the only point at which there will be any chance of reform is after collapse has occurred, and even at that point I would characterise that chance as slim. For effective consensus to solidify around a new way of doing things, for this way to take root and last, will require truly extraordinary circumstances. The type of human who gets a kick out of running the show at the deep cost of others is not going to get washed away in the flood. Establishing a system that prevents psychopaths from getting their hands on the money-wheel is no small task, keeping it up and running for centuries an order of magnitude harder. For now the scumbags are at the helm, enjoying every second of the ride. We can only hope their recklessness does not crash the system too hard into the oncoming wall.
Actually, the difference between big business and organized crime is mostly tailoring.
I agree, GS is nothing but gutter organized crime glorified by a prostitute government (like Obama’s vile remarks the other day) and a prostitute media. It’s an ongoing disgrace to America that this legalized racket exists at all. It shouldn’t exist at all. It had no right to exist in the first place, even before its crimes engulfed the economy as a whole. Now justice demands far more rigorous restitution.
There’s no amount of focus on Goldman which could possibly be “unfair” to it, although this place does have trolls who say the contrary. (I doubt the frequently expressed idea that these are paid flacks. I always picture pro-corporate trolls being losers who are just mercenary wannabes, who only dream someone would pay them for their shilling.)
This post is sort of funny. For a while I noticed how MS, although no better than GS in its actions, was more adept at staying out of the bad PR media eye.
(For example, it was only a few months ago that I learned that MS made December 2008 “disappear” from its accounting same as GS. But only GS got clobbered for it at the time.)
It reminded me of how BP, at the cost of an empty greenwashing campaign and not brazenly affliating itself with climate change denier groups the way ExxonMobil did, was able to achieve much better PR even though its environmental and safety records were consistently no better than Exxon’s.
lately, though, MS has slowly been having the light expose its own sliminess.
Still, all of this is incidental to the politics here. It’s an ancient rule of the political struggle – focus on one, personalized enemy, and make him representative of the whole.
To say Goldman is the worst culprit, and is representative of the whole, and to focus on him, is simply good messaging. (Why is the by now attenuated Al Qaida still the face and propaganda name of terrorist groups everywhere? It’s the same principle. Except of course that Goldman remains the #1 criminal actor today.)
Besides, both morally and (in most cases) legally we agree that all members of a conspiracy can and should be held responsible for all acts of the conspiracy. So even where any obscure hedge fund commits a given crime, that’s still the crime of all hedge funds, and of Goldman who is simply one big hedge fund.
I say legally “in most cases” since, as we’ve seen here, a major rationale for allowing corporate organization is to legalize various kinds of organized criminal conspiracies, like those of Wall Street; to legally exonerate the individual criminals and even protect much of what they stole from seizure.
I know if I had the power I’d simply apply the drug seizure and other racketeering seizure policies to everything these criminals “own”, right down to the most miniscule private effects.
Yves, have I mentioned lately how “dead on” you are? As usual, you make too much sense.
There is another good reason to keep writing about Goldman – it makes for damn fine reading.
Thanks Yves.
What a great post and what great comments to read! Really interesting what media waves two litte computer jobs could create!
As this blog is called “naked capitalism”, I wonder whether “capitalism 2.0” could be considered to begin with the Robin Hood Tax?
As long as public debts and sovereign bonds exist “under cover” and “behind the scenes”, i.e. too little understood, capitalism’s clothes can’t be seen, can they!?…
More on http://bit.ly/9fNURo
Manipulating an internet poll is something most companies would fire an employee for. But is it news? I can see that you are trying to be proactive, but lets rope the kleptocracy for something that is worth it. There is no shortage.
Excellent work! Thank you. Comparing the culture of high finance and Wall Street to a ‘cult’ is SPOT ON. I really hadn’t thought of it in those terms. The depth of the depravity is stunning from the ‘best and brightest’ which reveals how ‘common’ they really are.
What is really scary is the revolving door in the federal government and these fine people on Wall Street. Its regulatory capture but also hijacked the national government for their own sick and twisted ends which have proven to be destructive, rather than finding ‘value’ or enabling the serfs, debt slaves to live their modest underling lives.
The derivatives markets via the futures markets and CFTC also shows depth of gluttony, sloth and greed in an estimated $607 TRILLION dollar market of insiders. Wonder how the losses coming from there will be socialized? TARP II, III, and IV of serial robbery sponsored by a Congress that also belongs to the same ‘cult’.
Its a really bad movie with a cast of bad actors but unfortunately, no heroes can be found. I wish I could walk out and not watch the sequels; but this is the reality now that will leave no one untouched, deserving or not, invested or not. Where are those crime fighting super-heroes when you need them?
Internet polls are pretty much useless. They’re ok for getting an informal indication about an uncontroversial topic, but not much more. And anonymous polls by definition are just asking for trouble. This particular effort might have been somewhat naively done, but the participants will have learned from it and next time they’ll just be more subtle about it.
`petitions’ in general don’t seem to be much use, because politicians know the only vote that counts is the one on election day; and they also know there is no such thing as one-vote-one-value in western `democracies’. At the end of the day, all we’re ever voting for is who will make up the ‘money party’ for the next term.
You can bet there’s someone out there who is already gaming polls or petitions for money and not getting caught. They’re the ones to be concerned about.
Please, Goldman has made itself the poster child. We may have to rename hubris and “narcissism” to “Goldmanism.”
I’ve never considered it personal. In fact, you ordinarily go out of your way to explain things that are merely a matter of the culture, rather than particular sins at Goldman.
Unfortunately, in my purely anecdotal experience, every time I think to myself “SURELY ‘x’ wouldn’t do something that stupid,” I am wrong. Not only are there apparently a lot of idiot savants out there, but many people who believe that rules don’t apply to them, or that they are entitled, or that they won’t get caught.
This circle the wagons we didn’t do anything wrong mentality is why this whole thing is incapable of reform. In the last spasm of reform in the thirties, you at least had the spectacle of Richard Whitney going to jail for embezzlement which gave a dramatic example of malfeasance at the heart of Wall Street. So far no one has blown up the way Whitney did.
A second to wunsacon: You have been on fire lately, Yves. Keep up the great work!!!
A system that works has makers that can, if they so desire, work the system. GS and MS work the system that they in their current incarnations and in other incarnations previously have made what it is today.
I agree with those who believe that when the flood washes the ruins of this system away that the makers, at least those at the top of the making industry, will have also made their paths to higher ground safe enough to climb above the flood zone.
It’s very un-American, but what would be the result if the flood were to come unexpectedly, in ways they haven’t pre-arranged? A quiet dismantling on the order of Phillip Le Bel’s destruction of the GS of his day, the Templar Order? Coming to arrest at midnight with no warning, orders given and carried out without prior notice? Perhaps destroying the ediface they will use to climb above the first few flood levels would find them braving raging waters along with the rest of us.
Perhaps, most especially in this instance, we’d do well to heed the purported words of Arnaud Amalric before the walls of Beziers in July of 1209, “Kill them all. God will know his own.” Rather fitting I should think for those doing God’s work. Immediate salvation.
“Oh, and before readers wonder why a young staffer would be charging client-related entertainment to his company, it’s part of the culture at most firms that the most junior person picks up the tab for wining and dining, to relieve the senior person of the nuisance of submitting the paperwork.”
Sorry for the OT(?), but there are a few scenes from The Sopranos that display this behavior and I couldn’t resist. Of course the “junior persons” in the Sopranos were actually paying for the whole tab, not just turning in the paperwork.
the only advice I would give to the women who work at Goldman Sachs — except of course the administrative assistants, security gaurds, cafeteria workers, HVAC repair people, temps, basic database administrators, human resources assistants, and corporate art consultants (no, on second thought, count them out — and throw them in with all the rest of them) I would advise “Get thee to a nunnery.”
Now!
Because Hell is God’s house of correction, and the Lord Damns Sinners, Heaps upon Heaps, and the weight of thy sins be laid upon thy sould like so many sticks of fuel!
For There will be no high ground for sinners when the righteous roar of the Almighty flood washes clean the evil doers and evil deeds, but instead they will be as rocks pulled into an angry sea and all their Godless lies will be pounded by the fury of the Lord as into grains of sand.
yes, God will know his own, and on that day he will say to them, “Depart from me, ye that work inquity, for you knew not me, and now in the end of days, I know you not.”
As for the men, it is too late (except for all the categories listed above). The best thing to do now is to perpare thy soul in fervent prayer, and hope, somehow, for Mercy.
-Revered Reginald Roundtree
Church of the Holy Fire
Taxfree, Mississippi
Amen, Jeremiah Craazyman! Ah just love the sulfrous perfume of Old Testament brimstone in the morning. Yea, may they burn in the lake of fire that is never quenched; may they weep and gnash their teeth in outer darkness for all eternity (and then some); may they in their lust stab away at the immortal beast with their steely knives but never sated their gnawing hunger.
I recall the incident Yves recounts of GS’s Brian Griffiths in St Paul’s Cathedral and thought it had to be a joke.
St Paul of course was the apostle who declared that the love of money was the root of all evil, but a moneychanger given pulpit in the temple to voice his revisionist gospel was just too rich in Godman irony. That was the only noted context in which Jesus resorted to violence (against objects not people, though I wonder if the gospellers left out a bit). He regularly got seriously pissed at the finely-robed high priests and Pharisees (vipers and whitewashed tombs), but only resorted to a whip when he toppled the usurists stalls, he declared: “My house shall be called the house of prayer; but ye have made it a den of thieves.”
Amen.
Reverend Roundtree,
Fine sermon. I am thinking about attending your church. Do you have rest rooms inside or outside the church?
Yves,
You can kick on the GS dog all you want. It makes for delightfully salacious reading.
As an enterprise, GS is indeed a cult. Be very clear, it is a very flat organization and it relies on a performance review process that is directed toward reinforcing the cult mantra. The result is an absolute blindness to outside perceptions.
It does not help that in recent years there have been a string of individuals who have gone off the reservation. All too often trading positins have been taken that are little more than extraction exercises.
Create and sell CDO’s that are sure to tank. Then buy CDS that guarantee a payout against the sold paper. Now, the orgination of CDO coupled with CDS was not a trade that was created sequentially, it was only the execution that was sequential.
Another interesting gambit is to induce an exchange to permit on site computers that get a nano-second before posting look at incoming orders, which look will facilitate front running. This is such a good idea that there was this immigrant programmer who got turned into the government for alledgedly stealing proprietary programming. The implication is that he wanted to take his programming insight down the road for much larger personal gain.
I recall when I first started as a phone clerk on the Board of Trade. What I was taught was if you’re going to be a trader, take only what the market will permit. If you try to take more, the market will destroy you.
So, in kicking on the GS dog you are merely aiding the market in its inexorable mission to destroy those that take too much. Keep up your very good work.
(Changing my handle after the Chris identity confusion last week)
Yes, I remember the programming theft story. Here’s a link:
http://www.bloomberg.com/apps/news?pid=20601087&sid=axYw_ykTBokE
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”
Naturally Goldman wouldn’t dream of doing anything like that with it themselves.
(By the way Yves, may I suggest “entitlement” for “deservingness”).
Not that I support any tax whatsoever, but this guy http://www.wallstreetoasis.com/blog/aleynikov-charged-in-gs-doomsday-machine-theft gets arrested?
What?!
Why not?
He stole, would that the Justice Department were as diligent with respect to the inherent fraud of CDOs and like trash.
I’ve never heard of the Robin Hood tax until now.. I like the concept… I find it really hard to believe that Goldman Sachs would be careless enough to be traced back to their company for rigging the vote. Maybe it’s a set-up! :)
As far as the vote rigging game goes, I certain HOPE they are guilty. And if they aren’t guilty, I certainly hope they GET CONVICTED for it anyway (in the court of public opinion).
They have really and truly lost my good will. At this point only the complete dissolution of the company, and the clawback of all bonuses for the last 20 years, would satisfy me that justice had been done. Maybe 50 years.
And BTW, Yves, if it matters to you, I LOVE reading about those scumbags at Goldman Sachs, their continuing crass self-righteousness, and any well deserved comeuppances that fall in their way. Please, write about them often.
Goldman Sacks of money hacking the net … could it be their Donny Rumsfeld inspired CIA Retainer firm, BIA? …
Excerpt;
“But the close ties between active-duty and retired CIA officers at one consulting company show the degree to which CIA-style intelligence gathering techniques have been employed by hedge funds and financial institutions in the global economy.
The firm is called Business Intelligence Advisors, and it is based in Boston. BIA was founded and is staffed by a number of retired CIA officers, and it specializes in the arcane field of “deception detection.” BIA’s clients have included Goldman Sachs and the enormous hedge fund SAC Capital Advisors, according to spokesmen for both firms.
BIA has employed active-duty CIA officers in the past, although BIA president Cheryl Cook said that has “not been the case with BIA for some time.”
But the ties between BIA and the intelligence world run deep. The name itself was chosen as a play off CIA. And the presence of so many former CIA personnel on the payroll at BIA causes confusion as to whether the intelligence firm is actually an extension of the agency itself. As a result, BIA places a disclaimer in some of its corporate materials to clarify that it is not, in fact, controlled by Langley.
BIA’s clients can put the company on a retainer for as much as $400,000 to $800,000 a year. And in return, they receive access to a variety of services, from deception detection to other programs that feature the CIA intelligence techniques.”
Read more:
http://www.politico.com/news/stories/0110/32290.html#ixzz0fTjlcxVM
Deception is the strongest political force on the planet.
Can we all say together now — CIA — PRIVATIZED!
Deception is the strongest political force on the planet.