Tuesday, July 28, 2009

Michael Lewis on Goldman Sachs

Today at Bloomberg, Michael Lewis has an interesting column on the constant Goldman Sachs bashing that we've seen in the media, and makes an off-hand reference to the controversial Rolling Stone article by Matt Taibbi.

Lewis goes point by point to rebuff the attacks on Goldman, concluding with this:

Rumor No. 5: Goldman Sachs is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Those words are of course taken from a recent issue of Rolling Stone magazine and they are transparently false.

For starters, the vampire squid doesn’t feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs -- nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does --ever happens by accident.

This is a gutsy stance, but I think he misses the point.

Matt Egan recently had a piece at the Fox Business News website on the Goldman-bashing phenomenon, quoting me as calling Goldman the "King Rat of Wall Street." He didn't capitalize the expression but he should have. I was referring to the James Clavell novel and 1960s movie about a prisoner of a Japanese prison camp who somehow manages to accumulate wealth while all around are suffering.

It's only natural to feel envy but with Goldman it's more than just that. The public and media have a genuine reason to wonder why Goldman emerged unscathed from the financial crisis, to question the extent to which the bailout benefited Goldman, and to question its many decades of intimate ties to the government.

It's a mistake to dismiss the genuine questions that have been raised about Goldman as mere envy. Lewis seems oblivious to the genuine and well-warranted anger that people feel, and that's a mistake.

But he's right about one thing: Goldman needs to cease its longtime policy of keeping hautily keeping the media at arm's length--assuming that's what he means by "we who are inside Goldman Sachs must open a dialogue with you who are not. Not for our benefit, but for yours."

He's got that partly right. Goldman needs to open itself up for the sake of its own reputation and continued ability to generate obscene profits.

© 2009 Gary Weiss. All rights reserved.

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