Word: goldmans
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This explanation for Goldman's success hasn't been getting a lot of media play lately. Fox News talker Bill O'Reilly instead refers to the firm as an assemblage of "swine." Rolling Stone writer Matt Taibbi, showing more creativity if not sympathy, calls the firm a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money...
...name-calling is fun - and, to some extent, merited. But Goldman's place at the top of the Wall Street heap can easily be explained. Same goes for JPMorgan Chase, Goldman's somewhat less controversial partner in profit. The No. 1 reason these two banks are doing so much better than their rivals is that they're better at what they do than their rivals...
...book, Ellis traces Goldman's successful management approach to the firm's slow recovery from near failure and mortal embarrassment after the 1929 stock-market crash. (An investment fund it launched was one of the era's biggest disasters.) Goldmanites had no choice but to stick together and look to the long run. The firm's now pilloried entwinement with Washington (some call it Government Sachs) began in those days too, after managing partner Sidney Weinberg made the rare-for-Wall Street move of backing Franklin Roosevelt in 1932. That led to a key role for Weinberg in the World...
...teams at Goldman Sachs and JPMorgan Chase avoided giant missteps in the lead-up to last fall's panic and are now wresting market share from wounded competitors and raking in billions. They've already paid back the bailout funds they got in October, which means they're exempt from compensation limits and can disburse their gains to employees in the form of titanic end-of-year bonuses. That's how capitalism is supposed to work, right? (Read "Hooray for Boring Banks...
Well, yeah, except that Goldman and JPMorgan played right along with many of the Wall Street practices that led to the crisis. They fought regulation - of derivatives, for instance - that might have prevented it. And their big profits can be traced not only to skill but also to the government's decision last fall to bail out the financial sector just as the troubles that toppled Lehman Brothers and WaMu and forced Bear Stearns, Merrill Lynch and Wachovia into shotgun marriages began to endanger Goldman and (to a lesser extent) JPMorgan. "No one should be confused about the extent...