“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?”