The hearings today were great theater. Several Senators referred to the fact that 4 or 5 other CEOs should have been sitting with Lloyd Blankfein. Who are they? Was Goldman on trial or was the system on trial? I submit that the system was on trial, and, while I did not catch all the testimony, I’m afraid the trial was not prosecuted as well as it might have been.
I found Blankfein to be the most competent witness I heard. He argued that investors were informed and knew the risks they were assuming. He defended the soul-less transactional approach that pervades industry today. He knew some things and did not know the things that he was not supposed to know. Wasn’t his confusion regarding how to respond to the questions about the release of Tourre’s emails priceless? I don’t think it ever occurs to Lloyd to consider what the right thing to do might be.
The unasked question is, “how does such a culture comes to exist?” Why do employees engage in renegade actions, if they were such? Didn’t Lloyd say how strong the ethics are at Goldman? So the basic argument is that “ethics are strong, maybe my people didn’t do enough due diligence, and by the way, we’ll throw this kid under the bus.”
I can promise you these elements exist at Goldman:
- You are defined by what you do
- If you don’t produce, you are out
- Do not question the prevailing thought process
- You may violate certain portions of the Code of Ethics so long as your manager and team benefit and these violations are on the unspoken, unwritten “approved violation” list. Generally these will make lots of money for the firm and yourself.
- Do not rock the boat
- Do not mention “that which must not be named”
Lloyd had a certain amount of congruence. He was quite at peace with who he is. He is very intelligent and can navigate the shoals of rationalization, compartmentalization, and objectivism to be congruent with his world view even when his words are slippery. They are slippery in a way that makes perfect sense to him. The problem is that within Goldman, every other employee has their antennae up. The are listening to to the spoken word, cueing off the non verbals, seeing the consequences for others, and making the most rationale decision they can based on all that they see. The rational decision if you are an employee of Goldman, is to cut the corners you are supposed to cut. You will figure them out quite quickly by watching others. If you do all they do, and a little more, maybe you can name yourself the Fabulous Fab.
Tourre is a Goldmaneque Fractal. He and the organization have a simple and recursive definition and appear similar at all levels of magnification.
The reason the Senators said 4 or 5 other CEOs should be up there, is that they know intuitively that Goldman is a fractal of the greater financial system we have today, diagram below.