Goldman Launches PR Campaign to Burnish Its Tarnished Image

The Wall Street Journal has a report on Goldman’s new efforts to rebuild its damaged brand. The problem, of course, is that this is certain to be just that, a branding/marketing exercise, not an plan to make fundamental changes.

And why should it be? Goldman, even with the heat it received and the fines it paid, is still a spectacularly profitable firm. The cost of its, um, improprieties are vastly less than the ill gotten gains. So there’s no reason, from the firm’s perspective, to do anything more than damage containment.

As important, Goldman is a cult. I say that as a former employee, based not just on my experience a very long time ago (boy, am I getting old, more than 25 years ago) but also on reports I get from recruits and what I can infer from press reports. If anything the firm has become more inward looking over the years

The people there honestly believe that working for Goldman is the most elevated calling (Blankfein’s bizarre-sounding “Doing God’s work” remark no doubt resonated within the firm) and doing anything else is a fall from grace. Seriously. People who exit Goldman typically take a year or two to get over it the deeply-inculcated belief that departure = failure (this isn’t my own response; I’ve had a number of men volunteer that to me). Similarly, the first person I met at Goldman, which was through personal contacts, made it clear he was blocked in her career (his boss was too close to her in age) said he couldn’t possibly work for another firm. It wasn’t that he had assessed the tradeoffs and decided on balance it was still better to stay; he literally recoiled on a psychological level from the idea of departing. That sort of deep indoctrination was not at all unusual.

And people who had managed not to imbibe the Kool Aid were viewed with some suspicion. I left as a pretty junior person; the only reason I was remembered was a woman in investment banking in the early 1980s was an unusual commodity. Someone who checked out my reputation years after my departure said the party line on me was “She could have made partner, but we would have had to break her.”

Cults are marvelously effective forms of organization. Goldman managed to keep the real productivity-destroyer on Wall Street, internal jockeying, to a minimum (within the partner ranks) and extract even more slavish devotion than is achieved elsewhere on the Street.

But this simply means Goldman is a particularly well tuned machine. And as the constraints on financial firm bad behavior have been eroded by cultural shifts in the industry (the elevated importance of trading), the broader culture (a more widespread acceptance of “might make right” thinking) and the end of the partnership model (which made the firm’s leadership keenly aware of their downside risks), this machine has increasingly been turned to socially destructive ends.

From the Wall Street Journal:

Goldman Sachs Group Inc. is taking its first steps to change the way it does business after it weathered harsh criticism and paid a $550 million fine tied to its actions before and during the financial crisis.

The Wall Street firm, which is trying to rehabilitate its public reputation with an ad campaign that, among other things, tries to show how it helps create jobs, is planning to make changes in the way it reports its finances and how it relates to clients, investors and analysts, people involved in the planning say. It has also gone outside the company and hired an executive who has been a vocal critic of Wall Street pay practices and weak corporate governance

Goldman announced in May that it formed a Business Standards Committee to reshape its business practices and mend its reputation. Chief Executive Lloyd Blankfein said at the time that “there is a disconnect between how we view the firm and how the broader public perceives our roles and activities.”

Yves here. It isn’t hard to see the disconnect between the spin the firm is putting out, that it is changing how it is doing business, and the list of things that follow, which are entirely cosmetic. Even the move to hire Bess Joffe, formerly of shareholder-advocacy firm Hermes Equity Ownership Services, is a mere PR ploy. Hiring one executive is not going to make a dent in Goldman culture or processes. And the Journal tacitly acknowledges that later:

Goldman’s Business Standards Committee is examining conflicts of interest and attempting to set guidelines for the firm’s activities involving structured products such as collateralized debt obligations. It is also deciding whether or not to make more disclosures in its financial reporting.

Mr. Elson and others question how much change a committee like Goldman’s can make because it is staffed mostly by insiders at the firm. Companies that have gone through major investigations typically hire outsiders to overhaul business practices. Goldman’s committee is made up of 17 people, nearly all of whom are business heads and senior staff. Former SEC Chairman Arthur Levitt, who signed on in 2009 to advise Goldman on public policy issues, is also on the committee. “Often, the only way to make real change at companies is to change the leadership,” Mr. Elson said.

The irony is that Elson is head of the John L. Weinberg Center for Corporate Governance at the University of Delaware. The Weinberg family brought the firm to its preeminent standing and believed in the famed “long term greedy” approach to banking, that a parasitic approach to banking was short-sighted and destructive to the franchise. The Weinbergs are reported to be very distressed about what has happened to Goldman, but the attitude, of treating customers fairly, is now seen as an antique artifact rather than sound business.

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  1. Constantin


    Regarding your cult assertion: I had always wondered why GS, unlike other banks, make junior and mid-level people go through the grueling process of 12 interviews, but on reflection the whole thing now makes eminent sense. Not only is there a better chance to catch the hapless prospect blurt out something unintended in the 11-th bleary-eyed hour but the process also weeds out the less pliant, the no-so-desperate, and those who are less likely to stay till 9pm every evening wasting their lives and thereby making money for the partners. Even the early interviews are all part of this psychological breaking process, and cult indoctrination.

    1. micr line

      “make junior and mid-level people go through the grueling process of 12 interviews,”

      lol reminds me of scientology

  2. AndyC

    What again?

    They will wear a hole in their image with all this burnishing, ok that assumes they have an image and is merely a speculative assertion.

    : )

  3. Siggy

    GS is primarily a trading firm. It makes markets and has few clients and many customers. Making markets is the key to understanding GS. The nature of making markets is such that serving a client can be impossible.

    The Abacus deal is exemplary. In that deal GS served no client but did serve several customers. The distinction between client and customer is critical. You would not sell Abacus to a client but most emphatically would sell it to a customer.

    The structure, conduct and performance of GS says market maker not investment banker. Deals are structured to be sold. Investments in start-ups have a targeted profit at the end of an expected timeline. Mark to market is a serious exercise that is done not to pretty up the balance sheet but to protect against catastrophic loss.

    Why the PR campaign? In an increasingly constrained trading environment it’s just too easy for customers to go elswhere. There needs to be an image, true or not, that GS is a pilar of rectitude and can deliver the best prices for acquisitions or liquidations.

    The GS PR campaign is like the sweet smelling pollen wafting on the breeze that comes after an early morning spring rain. Comes noon and the high sun, the breeze is gone and the humidity stifles. It shall be the same for GS. Of course GS may well recognize that there is considerable merit in being a much smaller partnership that takes on client relationships and which once again thrives on being long term greedy.

    They have the smarts and the hardheadedness, we get to see if they have the will.

  4. readerOfTeaLeaves

    Goldman is a cult.

    In Econned, Yves points out that there is a lot of quantitative data used in economics, but too little qualitative information.
    It strikes me that this post is precisely the kind of qualitative information, almost grounded in anthropology, that the field of economics needs to produce and imbibe in order to generate a better grasp of ‘the human factors’ involved in economic behavior.

    The nature of the Goldman cult is well worth bearing in mind; these people see no real reason to change, and assume that cosmetics are their primary problem. Personally, I find it moderately entertaining that they view anyone not obsessed with making money on Wall Street as some kind of ‘failure’. This leads me to assume that they view cardiologists, orthopedic surgeons, dentists, theoretical physicists, agronomists, programmers, and other enormously talented people as somehow ‘not quite up to snuff’?

    Personally, I’d feel suffocated and claustrophobic if my worldview were so Wall Street centered. Presumably, by Goldman criteria, that makes me a hopeless failure; a notion which I find enormously amusing.

  5. Hugh

    It is shocking that looting is so misunderstood, and I am sure Goldman will now re-educate us to its social benefits. I can see a whole new ad campaign from it based on the slogan “Be screwed by the best!”

  6. doom

    Nice thing about cultists, they make model prisoners – obedient, positive attitude, they’ve learned to take the petty hazing and humiliations in stride. Look at Leslie Van Houten, still the sweet girl she’s always been. When this financial mess is finally sorted out, these Goldman alums will be the most productive $0.25-an-hour workers in America. Those correctional food-service kitchens will sparkle!

  7. scottinnj

    Heh…Humorously a bit off topic but Barry Ritzholt @ The big picture had a contest a few weeks back asking for the best slogans for this new campaign by Goldman. While I liked “Goldman Sachs: Doing Gods Work since 1862” the winner was:

    “Goldman Sachs – we put the douche in Fiduciary”

  8. alex

    Yves: ‘Someone who checked out my reputation years after my departure said the party line on me was “She could have made partner, but we would have had to break her.”’

    Unless I miss my guess, that would have been difficult. You’re just too American (that’s a compliment).

  9. Student


    My own experience backs up exactly what you say. I’ve seen one too many new GS college recruits lapping up the marketing spiel about doing meaningful high-value work like it was true. They think they actually add enough value to deserve their outsized pay packages. Now I suppose they can be forgiven for thinking that they are just making markets work (adding liquidity, reducing spreads, etc.) since most of them are naive, doe-eyed kids who have just barely managed to escape the theoretical confines of their uni’s Econ department (but not without a healthy dose of indoctrination, mind you). But even a fool has got to realize that checking pitch books for typos, printing and binding them and running pointless comps and league tables in Excel does not a 6 figure pay package make.

    Alas, I find that the cult is not endemic to Goldman. Similar thinking and mentality prevails in the broader cross-section of people that go into financial services and consulting these days. I still hear the same bullshit justifications being spewed for what they do – we add liquidity, make markets efficient, generate returns for pensions, etc.

  10. Chris

    I think the whole cult mentality pervades corporate America in general. Unquestioning obedience and being a yes man or woman is the name of the game in corporate America. Say or do one thing falsely and you’re out the door. Question leadership and you’ve got a black mark.

    After being in the workforce a mere 20 years, I’m tired of it.

    1. craazyman

      Corporations are what our fractured fragmented culture has instead of tribes, and the high-priests are the morons in charge of all the meetings, where money-blood-spirit sloshes randomly into pools where idiots are baptised with bonuses, and our civil warfare is symbolic and our bullets are money.

      But the underlying psychic structures are the same as they have always been — eternal and protean and demonic. And so we shouldn’t be surprised when ethnic cleansing kills the poor and then the middle class, to give the wealthy lebensraum, sanctified by their possession and accumulation of the money-blood as favored children of the deities.

      However, we know that everything contains and brings forth its opposite. So when total consciousness is applied to manipulating the money-blood in all its rivulates then truly good things can happen. This is why securitization is potentially evil, as in fact, is incorporation. Nothing new here. But because consciousness is removed, strategically in a way that is quite hidden and almost beneath calculating awareness, then spirit is removed and only death remains.

      OK, this is a bit over-the-top, maudlin, melodramatic and flagrantly macabre — I will admit. But for those of us who carefully watch the signs in the skies — the outer skies and the inner skies — it all makes sense as an aesthetic whole, which is the strongest form of truth, correlation be damned. Who can intuit causation from correlation without channeling first anyway? Better just to go right for the big T in the light of the Lord.

  11. Francois T

    A cult huh?

    Hmmm! Unless we proceed with mass dis-indoctrination, there is not a lot of practical solutions.

    Apart from calling the ATF of course…but that is quite messy.

  12. Judy Yeo

    The piece NYT had on the passing of Sidney Weinberg Jr had the phrase “passing of an era”, no doubt it probably marks the end of an era where anyone looked to the long term over the short term. Though in terms of GS that probably occurred in the late 90s. That it took that long to have any visible impact and avoid collateral damage is the real wonder.

  13. Progressive Ed

    They can start with the resignation of the top 100 paid partners at GS. Then they can make an agreement with the AG that these same people will be barred for life from working in any aspect of the financial industry. Once this agreement was made public, some of the incredible anger toward the Wall Street banksters might begin to abate.

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