“It’s Too Bad. And I Don’t Mean It’s Too Bad Like ‘Screw ’Em.’”

Photo: Joshua Roberts/Bloomberg via Getty Images

Loyd Blankfein cleared his throat and moved away from the podium. Grasping a glass of water, he looked down at the long table where his top executives were facing the crowd at the Goldman Sachs annual shareholder meeting this spring. His chief operating officer, Gary Cohn, glanced up at him and discreetly rolled his eyes. Evelyn Y. Davis was still talking.

“What is the situation on Facebook?” she whinnied, in her extravagantly nasal Dutch accent. “The short-selling against clients. What is the story on that?” Blankfein had once found the octogenarian activist shareholder amusing, but that had long worn off. Since the financial crisis, she had come to seem like a personification of the public animus against his firm: willfully misinformed, impervious to reason, single-minded in pursuit of corporate blood. In particular, his own.

Once again, Davis was calling for his resignation: “Like I said, Lloyd, I have nothing against you perrrrsonally. But it is a verrry tough job. It’s very tough for anybody. And it’s proven too much for you. You tried your best, Lloyd, I know, but the circumstances are beyond anybody’s ­capabilities. I think you should leave after the meeting, if possible.”

“Thank you, Evelyn,” Blankfein said, putting down the glass. “I’ll take that under advisement.”

After the meeting, he gathered up his things. The board and shareholders would reelect him chairman by a landslide—97 percent of the vote. Not, he would later note, that you would see that information reflected in the media reports of the event, which would highlight the contributions of Evelyn Y. Davis, another shareholder who called Goldman Sachs “pretty much a disgusting place,” and the order of nuns who believed the firm’s compensation levels were a danger to “the well-­being of the public at large.”

Blankfein tensed his shoulders and headed for the door. One by one, the reporters in the room gravitated toward him until he was surrounded. “I’m always afraid someone will come down from another planet and view all earthlings based on what they see here,” he said, attempting to head them off with a joke. But they were intent on eliciting a sound bite that could be made into a headline. What about the recent report that Blankfein was planning to resign, a reporter from Reuters asked. Why, another asked, given all of the pressure he was under, would he even want to stay?

“What?” Blankfein cracked, gesturing at the crowd that had him nearly pinned against the wall. “And give up all this?”

“It’s a fair question, why do you want to do it,” Blankfein says a few weeks later, sitting in a booth at the Three Guys Restaurant, a diner near 76th and Madison. He rubs his hand over his forehead, massaging the lines that scrunch together when he is thinking and contribute to an unfortunate resemblance to Austin Powers’s Dr. Evil. “It’s not fun a lot of the time,” he says. “But there’s a little bit of ‘for better or for worse’ about a lot of aspects of life, not just marriage. You can’t sign on for just the good parts. I mean, think of the warrior class, and the perquisites the warriors are given in, say, feudal Japan—and then, goddamn it, there’s a war! They’ve got to go up and fight. I mean, you can’t be the CEO without having to do what CEOs have to do in distressed moments.”

Dressed down in shirt sleeves and scuffed loafers, he doesn’t seem so much like the Devil, as Don Imus has taken to calling him, than someone you might meet at a bowling alley. He is pale and a little saggy around the middle, with no visible tail and a smooth pate where his horns ought to be. He is a product of Establishment-era Harvard, but his cadence owes more to Woody Allen–era Brooklyn, where he grew up. He cannot resist a one-liner.

“This is a tough job to decline or turn away from,” he goes on. “When things are going well, you don’t want to leave. Because you’re influential, it’s exciting. You get to work around very smart, motivated people. When things are going poorly, you can’t leave, because you get overtaken by your sense of responsibility. Your obligations to people whose careers you’ve sponsored, shareholders who have invested with you, board members who took that job because you’ve asked them to. That’s why I think my predecessors left only when they got opportunities they couldn’t decline. Hank Paulson and Bob Rubin both went into government. And, of course, Gus Levy died at his desk, which he also couldn’t decline.”

So, what would be his preferred method of retirement?

Lucas van Praag advising Blankfein during congressional hearings in Washington, D.C., last year. Photo: Chip Somodevilla/Getty Images

“Well, I’m going to try not to do what Gus did.”

Lucas van Praag, Goldman’s very charming, very British head of public relations, who has been sitting next to me taking careful notes in longhand, chuckles indulgently—but it’s not all that funny. Over the past few years, Blankfein has been under the kind of stress that would give any 56-year-old’s physician pause, starting with the abject terror of the financial crisis itself. (It’s a wonder, in retrospect, that none of those who spent sleepless nights staring into an abyss of their own creation didn’t keel over.) Under his watch, Goldman made it through the crash intact and even profitable, but in the aftermath, the firm’s business practices have been picked apart by journalists, lawyers, and government officials. It has been castigated by the president, accused by the Securities and Exchange Commission of fraud, and sued by numerous clients over its actions leading up to the crash. Both the Manhattan district attorney and the New York State attorney general are reportedly looking into its mortgage-backed-securities activities. And in April, Blankfein was accused of misleading a Senate committee, and it was reported he could face perjury charges.

Consequently, there isn’t a person on planet Earth who expects Blankfein to follow his predecessors into public service. While he says he’s not planning on leaving any time soon, “certainly not in this maelstrom,” he may not have a choice. Rumors of his pending resignation have been popping up with regularity for the last year, and more respected minds than Evelyn Y. Davis have suggested that his leave-taking would signal that the firm is leaving a dark period behind. Last week’s disappointing earnings report only added fuel to the fire: The firm missed estimates by almost 20 percent. Its shares are trading at a two-year low, it plans to lay off at least 1,000 people, and analysts speculate that regulatory restrictions will severely curtail the ­trading-reliant revenue model Goldman Sachs has expanded during Blankfein’s reign.

Should his era be coming to a close, Blankfein will be remembered first for having seen the 142-year-old-firm through some of the most perilous months in its history. But he will also have the distinction of having allowed Goldman Sachs to become a symbol of everything wrong with banks, corporations, even capitalism itself. Over the past three years, Goldman Sachs has been accused of having its hand in innumerable sinister activities, including but not limited to being the driving force behind the collapse of AIG and the Greek economy, spurring a global food crisis, colluding with Qaddafi, hoarding the swine-flu vaccine, hogging the fryers at Shake Shack, and bamboozling its clients in order to pay out monster bonuses. Even the firm’s name has become cultural shorthand for banker greed. “If you’re going to try to convince people you care about things other than money,” Amy Poehler quipped on Saturday Night Live, “may I suggest you remove the words gold and sack from your name?”

Goldman’s status as a lightning rod is frustrating to the people who work there. In their minds, the firm is the least obvious culprit among the financial institutions who attended the cheap-credit party. It did not issue faulty mortgages, or foreclose on people’s homes, or raise interest on credit cards, or jack up debit-card fees on consumers. Sure, it bought and sold the debt from those consumers, facilitated the sale of some of their bad debt to clients—but those were sophisticated investors, corporations, pension funds, extremely wealthy individuals. “We’re not saints,” one executive at the firm told me. “But we didn’t cause the crisis.”

The Goldman employee who finds this most exasperating may be the one Keith Olbermann recently named the Worst Person in the World. “It’s too bad,” Blankfein says at the diner. “And I don’t mean it’s too bad like ‘Screw ’em.’ I mean it’s too bad like I regret it.” But then he repeats a variation on the firm’s party line, which is that Goldman Sachs is being punished for its success. “I think there’s an element of ‘We’re a wholesale firm and we don’t deal with the public and so we’re mysterious,’ ” he says. “Mysterious can be cool, if you’re in Hollywood and everyone’s happy. But it can be really bad if people perceive that the financial interests are adversarial, that there’s money versus people. A lot of Goldman Sachs people went into government, so at a time when there’s a distrust of institutions, some of that reflects on us. And Goldman Sachs is successful, so there’s this feeling of ‘Ho-ho-ho, how’d you be successful? What did you do?’ ”

He may be right, but even in his Brooklyn twang, this argument is not particularly endearing—or satisfying to anyone who suspects the game to be rigged. Blankfein claims to have been humbled by the financial crisis. He points out that the firm recently completed a rigorous review of its business practices. “We’re going to come out of this productively,” he says. But the years of opprobrium have offended his sense of justice, and seem to have pushed him and his cohorts further into an intractable position: Goldman Sachs versus the world. “Look, I worry about these things, and I wonder how we slipped up and how are we behaving,” he says. “But I have a sense of who we are that’s inconsistent with what I perceive theirs to be. I’m not saying the world is crazy and we’re right, but I hope that’s the case.”

Photo: Newscom

That he personally has become a target of ire is especially baffling. “It feels, you know, weird,” he says. “Very weird. The idea that with all these things that have gone on in the world, and particularly institutions that really put the system at risk, that there would be all this focus on Goldman Sachs and me? That seems so weird.”

Inside Goldman Sachs, at least, Blankfein appears to be beloved. “We’re not supposed to talk to the press,” board member Lois Juliber told me, then gushed, “but I think he’s just terrific.” Among the rank and file, he’s known for his accessibility: He’s not above descending from his 41st-floor office to mingle on the trading floor or leaving personal voice-mails for employees who have distinguished themselves. He is often seen at events wearing a huge and beatific smile. “You will love him,” a friend who works at Goldman texted me before our meeting. “I think he is a misunderstood creature.”

Growing up in the Linden projects in East New York, Blankfein was chubby and brainy. “I would have liked to be a nerd,” he says. “I didn’t even make it to that.” Woefully uncoordinated, he decided to focus on being “funny and entertaining” instead and became known around Thomas Jefferson High School for his Borscht Belt–style sense of humor. By 16, he was already at Harvard, where he earned a reputation for his ability to memorize television jingles and popular songs. This, by the way, is a talent he still retains. “I was born this way,” Blankfein sings at the diner. “Born this way …” He recently attended a Lady Gaga concert with his 17-year-old daughter. “I am one with the popular culture,” he says. (He also once met 50 Cent at a play, where they discussed “businessy things.” “He’s an impressive kid. And by the way, it’s Fitty Cent. Fitty.”)

After graduating from Harvard Law, Blankfein worked briefly as corporate lawyer in Los Angeles, where, on weekends, he developed a fondness for the blackjack tables in Vegas. He soon discovered a career that better suited his interests: investment banking. When he arrived for his first interview at J. Aron & Co., a commodities-trading firm in New York owned by Goldman Sachs, Dennis Suskind, a partner, led him through a roomful of screaming traders to his office.

“Are you sure you can work in that?” Suskind asked, gesturing toward the floor.

“Work in it?” Blankfein shot back. “I go home to it every night.”

Ba-dum-bum-chhh.

“It feels weird. Very weird. The idea that with all these things that have gone on, there would be this focus on me?”

Though he is now worth hundreds of millions of dollars, Blankfein denies he was driven by the desire for wealth or status and is impatient with the cliché of the striving kid from the projects. “It’s not like I was Jay Gatsby, staring over at East Egg, being like, ‘How do I get to be in that crowd?’ ” (He does now have a house in Long Island.) Blankfein still feels like there was something accidental about his success. “You know, you do stuff, and then people ask you to do more stuff,” he says. “I remember once reading in a Kurt Vonnegut book the question ‘How did you get here?’ ” he continues. “Statistically, it just seems like such a remote thing. But it’s not, really, because somebody has to be here, and if another person was here instead of me, that person would be sitting here talking to you, and you’d say, ‘How did you get here?’ Someone had to do it. It happened to be me.”

Jud Sommer, Goldman’s former head of government affairs, attributes Blankfein’s rise at Goldman Sachs not just to his “raw brain power” but to his “high EQ.” He was interesting, a history buff, and fun to work with, ready with a joke whenever the mood got too tense. He’d stay late for an overseas call, if everyone else was, too. If someone’s father died, he’d understand taking a personal day. “He’s just really a human,” says Sommer. (If that seems like faint praise, remember, this is Wall Street. As Sommer says, “I don’t think everyone is a human at the end of the day.”)

Humans rarely become CEOs of large financial companies, and Blankfein was not the obvious choice to run the firm when Henry Paulson left to become ­Treasury secretary in 2006. Among the alpha males jockeying for the position were John Thain, whose affectless demeanor earned him the nickname “I, Robot,” and John Thornton, who was rumored to have once said that if a deal didn’t go through, “I will personally slit the throats of all my team and drink their blood.”

But it was Blankfein’s humility that Paulson most appreciated. “The thing that hit me about him was a sort of positive insecurity,” Paulson told the author William Cohan. Still, it’s not like Blankfein would ever be mistaken for JP Morgan’s handsome, affable CEO Jamie Dimon.

Photo: Newscom

“Lloyd is Lloyd,” says Gary Cohn, Goldman’s COO, whom Blankfein hired off the trading floor twenty years ago. “And one of the great things about Goldman Sachs,” Cohn continued, with an entirely straight face, “is that it allows individuals to be who they are.”

That characterization will come as a surprise to anyone with a passing knowledge of the firm, but imagine for a moment that it’s true, and that when no one is watching, the blue-shirted number-crunchers that stream lockstep into Goldman buildings around the world every day are free to let their freak flags fly.

Who would ever know? In addition to its reputation for bland conformity, the firm is famous for its extreme secrecy. To a remarkable extent, this corporate culture is nurtured by John F. W. Rogers, Goldman’s longtime chief of staff and overseer of its government, media, and client relations. Under Rogers, a Zelig-like personality with the sort of face that looks incomplete without a cigar poking out of it, policies ordinary for large financial firms are imbued with deep significance: Employees are expected to abide by fourteen strict principles—“We have no room for those who put their personal interests ahead of the interests of the firm and its clients,” etc.—and maintain a code of silence. “You don’t talk about the firm. It’s just not done,” says one former employee, who asked to remain nameless owing to a contract restraining her from saying anything that might be construed as disparaging about the firm “in perpetuity.” As at most large financial companies, conducting personal communications over the company system is verboten, although perhaps only at Goldman do compliance officers stage annual dramatic readings of their employees’ most embarrassing e-mails to drive the point home. (“Are you wearing lingerie, stuff like that,” the former employee says.)

“John Rogers’s philosophy always was that Goldman was this mystical, magical place,” says a former executive at the firm. “It was hiiiiigh in the mountains in this golden city. And every now and again, the clouds would open and it would come down and talk to you. And then up it would go again, and maybe it would be months before we would see Goldman again.”

The Goldman Way, as it has become known, was set when the firm was private, but it continued to pay dividends even after the company went public in 1999. “Journalists literally kissed their asses to get a callback,” says Charlie Gasparino, now a Fox Business Network host. If that wasn’t affection enough, they also showered the firm with positive news coverage.

“We were Teflon, much to the fury of our competitors,” sighs Lucas van Praag, who moved from London in 2001. A 61-year-old with curly silver hair and a gap-toothed smile that makes him look rakish, Van Praag has endeared himself to business journalists. He may sometimes be ­“economical with the truth,” as one puts it, but his fondness for vodka on the rocks (with lime), his willingness to share entre nous gossip, and his hilariously disdainful ­mwahaha laugh make the onerous process of extracting Goldman nuggets more fun. (“Do we do that?” he asks gleefully of the annual e-mail readings. “If so, I must get in on it!”)

It falls to Van Praag, as head of Goldman’s public relations, to marry the cultural dicta set by his direct boss John Rogers with the personality of his ultimate boss Lloyd Blankfein. For the first year of Blankfein’s reign, this wasn’t a problem. Then the financial crisis happened. As Van Praag would put it, “Nightmare.”

“Lucas always tells me, ‘Don’t be yourself,’ ” Blankfein said before sitting down at the diner.

“I always tell him to be himself,” Van Praag protested, although one suspects he was being economical with the truth.

Recall, if you will, the mood in early 2009. The Working Families Party was organizing bus tours to the homes of AIG executives; that company’s CEO told Congress that someone had threatened to strangle him with piano wire. At Goldman Sachs, which had just announced record profits, the idea was to keep their heads down even more than usual. Lower-level employees were leaving their logoed gym bags at home lest they be accosted by mobs. Blankfein was receiving, according to one report, 75 to 100 pieces of hate mail a day. People were yelling things like, “Why don’t you kill yourself?” and “You should be in jail” at Cohn in the street. Van Praag deleted his Facebook profile.

After it was revealed that some of the billions of dollars in bonuses Goldman planned on paying out that year had been made on the back of ailing AIG, it started to become clear that Goldman’s hiiiiiigh-in-the-mountains public-relations strategy might be ill-suited to the moment. As conspiracy theories about “Government Sachs” intensified, Cohn went into Rogers’s office. “We’ve got to do something,” he said.

Rogers looked at him. “When the wind is blowing 100 miles an hour, you don’t try and change direction,” he said. “You’ll rip the sails off. You’ve got to keep going with the wind. Eventually the winds will die, and then we’ll turn the boat around.”

Though Goldman wouldn’t get out in front of bad press, it did defend itself—though usually in such a way that only made matters worse. The firm infuriated the Obama administration by repeatedly insisting it hadn’t needed a government bailout; the reams of paperwork it ­provided to demonstrate that its exposure to AIG “rounded to zero” was widely mocked in the media. Van Praag became infamous for his elegantly scathing ­dismissals of ­rumors, such as press reports in 2009 suggesting Goldman’s record profit levels were owed to market manipulation, which he called a “chimera produced by a febrile mind.” (“Lucas is British,” says a former co-worker by way of explanation. “He doesn’t speak in American.”)

As for Blankfein, his interactions with the press were strictly limited. After the grilling of bank CEOs in front of the Senate Banking Committee in February 2009, he was spirited out a side door without talking to the media, while Jamie Dimon sauntered over to the press table. “Can I help with anything?,” he asked winningly.

When, in July of that year, Rolling Stone published Matt Taibbi’s now-famous description of Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money,” no one at the firm took the story seriously. “A hysterical compilation of conspiracy theories,” Van Praag told the Post. “Notable ones missing are Goldman Sachs as the third shooter and faking the first lunar landing.”

But much to their surprise, the vampire squid “picked up a head of steam,” as Blankfein puts it. Soon after, they broke with tradition and grudgingly set up interviews with Vanity Fair and Van Praag’s hometown paper, the London Sunday Times. The former delved into the firm’s conflicts of interest and said that Goldman under Blankfein “doesn’t have clients—it has counterparties.” During the latter, the CEO learned the limits of his corny, self-effacing jokes. He’s just a banker “doing God’s work,” he tossed off as he was leaving the interview.

That was around the time the nuns got interested.

Shortly before Christmas, after Forbes had likened Blankfein to the “cautionary tale” of a fraudulent Italian banker who was murdered by mobsters and President Obama had scolded “fat-cat bankers,” the members of the Pine Street Group, Goldman’s in-house leadership council, broached the subject of the firm’s interactions with the public. What should employees say about Goldman Sachs if buttonholed at holiday parties? someone asked. Van Praag put forth a bold ­proposal: “I think we should explain what we do and how the bank makes money,” he said.

The group settled on a more palatable response: “Change the subject.”

And so the bank remained silent, and the stories kept coming. At one point, Goldman’s slowness in paying veterinary bills on a litter of kittens found in the basement of its 200 West Street headquarters became international news. “There was a caricature of the greedy evil banker that needed to be filled,” says Neil Barofsky, the former inspector general of the TARP program. “And Goldman stepped into that role.”

Blankfein was, he said, “stunned” when the news flashed across his computer last April that the SEC was charging Goldman with defrauding clients on the long side of a CDO called Abacus, which the firm had created in order for the hedge-fund manager John Paulson to short the housing market. Improbably, he had reason to be: Breaking with its own policy, the agency had neglected to warn Goldman’s counsel until after the press release went out. According to its own records, the SEC investigators who brought the case didn’t think it was “that big a deal,” but it was the first large case to be brought against a financial institution since the crash, and the e-mails that were uncovered, from an amorous, 31-year-old French vice-president at the firm named Fabrice Tourre to his two girlfriends, in which he called himself “Fabulous Fab” and described CDOs as “monstrosities,” were so entertaining the media barely noticed the SEC’s other release that day, which detailed the agency’s failures in investigating a $1.5 billion Ponzi scheme.

About a week later, Blankfein, Tourre, and other members of the mortgage desk were summoned to testify in front of the Senate Permanent Subcommittee on Investigations.

Things started out pleasantly enough. “I just want to say, in many ways, the focus on just your firm is tremendously unfair,” Senator Claire McCaskill told Blankfein. “In fairness, there ought to be another four or five CEOs sitting with you.”

“I would welcome the company,” he said, managing a crooked smile.

Sometime later, across the country in California, where he was meeting with clients, Gary Cohn ducked into a bar and asked the bartenders to turn on C-SPAN. What he saw was disaster.

“So folks can pick securities with their perspective that they’re going to fail because they sell them short, and try to market them to somebody else who thinks they’re going to be successful, and that’s kind of the way business is being done?” Senator John Tester asked Blankfein.

“I’m so sorry,” Blankfein said, shaking his head. “The securities weren’t meant to fail. They succeeded, by conveying the risk that people wanted to have. And in a market, that’s not a failure.”

“It’s like we’re speaking a different language here,” said Tester.

“That’s my fault,” Blankfein responded, miserably.

Sitting in his office in New York, Cohn makes a gesture with his hands, like two ships passing in the night. “Lloyd is so smart, and his mind operates so much faster than other people’s,” he says. “I have been working for Lloyd for twenty years. I know what everything means. I have the dictionary. But I see how someone from the outside … could come away with the wrong impression.”

Blankfein once discussed “businessy things” with 50 Cent.“He’s an impressive kid. And by the way, it’s ‘Fitty’ Cent. Fitty.”

That wasn’t exactly it. Blankfein may have stumbled through the hearings, but it was clear to anyone watching that he was intellectually superior—and knew it. In fact, it’s hard to talk to most Goldman executives without coming away feeling impressed by how impressed they are with themselves. “Someone said to me the other day, ‘The problem is, you want to look at things rationally,’ ” Van Praag tells me. “ ‘You want to show people facts, and numbers, but most people think emotionally.’ ” He seemed to understand it was criticism, but there was a swelling of pride in his voice, as though he still couldn’t help but take it as a compliment.

“There are aspects of the firm’s culture that have the potential to make things … difficult for them,” says the New York City deputy mayor for economic development Robert Steel, who spent 30 years working at Goldman. “I do think that this focus and the single-mindedness and confidence, which we all think are good, can have a potential to be perceived as hubris and arrogance.” Even Blankfein, with his famously high EQ, can be remarkably condescending. “I think people envy the Goldman culture,” he says when I suggest that it might have some flaws. “Our firm is a successful firm. You probably don’t know that.”

The firm’s heightened sense of self-­regard was evident in the damning e-mails that have surfaced in investigations, and in its subsequent interactions with governmental bodies like the Financial Crisis Inquiry Commission, which accused Goldman of obfuscating and stalling. It is this infuriating attitude that helps make it such a compelling target. In Washington, the testimony of Blankfein and his colleagues was perceived as being disrespectful. “It was a terrible, terrible performance,” says a former government official. “The arrogance, the condescension, the really kind of minor-league, junior-varsity delay tactics … It was just very, very poor crisis management.” By July, ­Goldman had settled with the SEC for $550 million, but the report the subcommittee released this spring revealed exactly what kind of impression they got from the firm. At the press conference, Senator Carl Levin, the chair of the committee, suggested that Blankfein had committed perjury when he’d denied the firm had a “massive” short on the mortgage market. He announced that the subcommittee was forwarding the 639-page report to the Justice ­Department, with the recommendation it look into prosecuting Blankfein and others at the firm. Levin described Goldman as a “financial snake pit rife with greed, conflicts of interest, and wrong­doing,” and while he mentioned a handful of other firms too, it was, as usual, Goldman Sachs that made the biggest headlines. And not just because of the possible perjury.

“There’s something uniquely link-­baitish about Goldman,” says Reuters columnist Felix Salmon, who points out that articles about the firm regularly make it to Reuters’ most-e-mailed list. “They’re everything that everyone loves to hate about Wall Street.”

This begs an uncomfortable question, and sitting in front of Cohn, who is tall and bald and whose confidence is so large it is practically visible, I summon the courage to ask it. I’m sorry, this is awkward, I say. Goldman Sachs is known for holding its employees to extremely high standards. Why haven’t you fired the people responsible for the firm’s public image?

“Oh, that’s not awkward,” says Van Praag, who, as usual, is scribbling madly beside me. “Why would that be awkward?”

Cohn fixes me with a look of barely controlled irritation. For a second, I think he is going to reach for one of the baseball bats collected in the corner of his office. “It’s my view that what’s going on in the press is above and beyond anyone’s control,” he says. “It’s not like, if we had ten other guys handling our press, we would end up in a much different situation. Maybe we would have ended up in a worse situation. We have our team, and we stick with our team.” Had they tried to combat the bad press any earlier, he says, “I think it would have been worse. The sails would have been shredded.”

There is an alternate explanation floating around. “The theory is that Lucas and John Rogers have Polaroids of someone in Tijuana, with a 16-year-old girl and a donkey,” jokes a former executive.

On the shelf in his office, there are no visible Polaroids, but Lucas van Praag does have a rubber squid that someone gave him as a gift. It is perched on top of a small toy boat.

Matt Taibbi is perhaps only second to Warren Buffett when it comes to profiting off Goldman’s distress; he has since parlayed the success of the Vampire Squid article into a book and a gig as a TV correspondent. But at this point, there is an entire cottage industry trading on the notoriety of the firm. There are GOLDMAN SUCKS T-shirts and Lloyd Blankfein action figures and blogs devoted to hating “the Squid,” as it has become popularly known. So many journalists have written books that last fall, Blankfein had to recuse himself from judging the Financial Times’ “Business Book of the Year” contest, which the firm sponsors.

“It’s like the pilot fish that swim alongside the sharks,” Blankfein says at the diner.

“You know what pilot fish are called in the Caribbean?” asks Van Praag. “It’s even more apt: suckfish.”

Given that Taibbi’s earlier article had been so influential, is Blankfein worried he is going to be sent to “pound-me-in-the-ass prison,” as a source in one of the author’s subsequent articles suggested he be?

“Say what?”

“Uh. ‘Pound-me-in-the-ass prison.’ ”

Van Praag clears his throat.

“Well, that’s just outrageous,” Blankfein says. “That’s not even worthy of comment.”

While Blankfein’s primary focus, he is careful to point out, is on Goldman Sachs, the attacks against him personally are clearly a struggle. He says he doesn’t go to therapy—“I’m too blue-collar for that”—but a friend offers a diagnosis. “Lloyd did not covet a public persona,” says his college roommate David Grizzle. “And I think the vilification makes him sad.”

“Frankly, this has been going on for a long time already,” Blankfein says, sipping a Diet Coke. “And it’s not becoming less intense. Our headlines go on forever, and they’re big, while other things are one-day stories. How many times can Matt Taibbi write that we’re the vampire squid? How many shows can Bill Cohan go on?”

“He hopes a lot,” Van Praag says drily.

Blankfein tries to make a joke. “Look, the guys who were President Kennedy impersonators had a job, until he died. Then, of course, the skill set wasn’t nearly as valuable.”

Even now, he gets worked up talking about the “Page Six” item from a couple of years ago that claimed his wife, Laura, was acting “obnoxious” in the Hamptons. “That bugs me,” he says. “She’s like a civilian. And by the way, even the Mafia leaves wives alone. Does the mob go out and try to get someone’s wife because he finked on them? There’s a code. And how do you respond to it without giving people what they want? I mean, some of these pundits on TV say, ‘If Lloyd doesn’t like the dopey things I’m saying, let him come on my show and debate me.’ Yeah, you’d love me to do that. So, you’re really powerless.”

Blankfein’s friends and colleagues say that he’s held up remarkably well under the scrutiny, and cite his very presence at work every day as evidence. But it’s easy to believe, as Charlie Gasparino reported this spring, that he’s “tired of running the company.”

“I’m tired of Gasparino,” Blankfein shoots back. “I wish he would quit.”

Van Praag sighs.

“What I’d like to have is a clear head,” Blankfein goes on. “I haven’t had a clear head in a while, to be honest. You know, I have the background noise of the investigations and the inquiries, or the kind of low roar of the crowd out there, or the press in the background who’s trying to find some gotcha thing they can write about. The thing I miss most is having a quiet head.”

Soon after I meet Blankfein in the diner, Van Praag calls The Wall Street Journal’s attention to an error in the subcommittee’s report. At one point, its paperwork refers to Goldman’s 2007 net revenue as $11.6 billion, when in fact it was $45.98 billion, which makes the approximately $500 million profit the bank made on mortgage-related short positions not a “massive” amount. At least not by Goldman standards. “Five hundred million out of $45 billion that year? Oooooh, lots of money,” one top executive tells me. “I mean, I know $500 million to the man on the street is a lot of money,” he adds hastily.

The most objectionable element of this story is not so much the dollar amount as the fact that Goldman Sachs was betting against its clients at all. But the news spreads. In the Times, the journalist Andrew Ross Sorkin gets the subcommittee chief Bob Roach to admit to making a “typo.” The analyst Richard Bove, who had downgraded Goldman’s stock based on the Levin report, reverses his position. “It is becoming increasingly apparent that a terrible wrong may have been done to Goldman Sachs,” he says. “Goldman Sachs is the scapegoat of our time.”

For those inside the firm, it feels like they might have finally turned the boat back around. “We did it,” Van Praag tells me happily. “We changed the narrative.”

Then, all too soon, the wind picks up again. On Bloomberg television, William Cohan suggests that Goldman “got to” Bove. Taibbi accuses Sorkin of giving Goldman a “rubdown.” The Justice Department continues to comb through the firm’s paperwork in search of further incriminating secrets. And the press surrounding last week’s earnings introduces a humiliating new story line: that the board may leverage a Blankfein resignation as a “trade” to thwart an indictment. The Business Insider runs a smiling picture of Blankfein with the words WHO NEXT? on his forehead.

For now, Blankfein still enjoys the support of his crew.“Lloyd was the steady hand on the rudder,” Rogers calls to say. “People at the firm will tell you that one of our greatest fortunes heading into this was having Lloyd at the helm. And he shares that same level of support when it comes to helping chart the firm’s future.” It’s a future that Blankfein is looking forward to, as well. “We’re not just sitting here like, ‘I hope, I hope, I hope it blows over.’ ” he says. “But I hope it blows over.”

“It’s Too Bad. And I Don’t Mean It’s Too Bad Like […]