William D Cohan’s book tells how Goldman Sachs profited during the recession, but doesn’t offer anything new, says Paranjoy Guha Thakurta
AFTER WRITING a book titled The Last Tycoons on the Lazard brothers and another appropriately called House of Cards on the last days of Bear Stearns, journalist William D Cohan’s latest offering is a not-so-flattering account of how Goldman Sachs profited when its peers collapsed in the wake of the Great Recession that started four years ago.
By September 2008, bigwigs on Wall Street — notably Bear Stearns, Lehman Brothers and AIG (American Insurance Group) — had gone belly up, precipitating an international crisis the likes of which had not been witnessed for more than seven decades since the Great Depression of the 1930s. A number of books on the crisis have been written but this is the first in-depth publication to closely scrutinise the working of the financial biggie that not just survived but prospered as its fellow firms went under.
Cohan delves into considerable detail about the history of the firm set up in 1869 by European Jewish immigrants, Marcus Goldman and Samuel Sachs. The circumstances that led the firm to acquire an awesome reputation — that subsequently took a battering — are interesting to those who wish to understand the roots of “robber baron” capitalism in America that culminated in the recent crisis.
In this milieu of devastation and degeneration, Cohan points out how Goldman Sachs did it “better” than its peers, earning the ire of President Obama, among others, who perceived the firm, in some senses, as epitomising all that was greedy and grossly unequal about American society. The book, however, does not contain new revelations. At one level, Cohan explains how Goldman Sachs successfully projected an image that it was smarter than the rest. At another, he elaborates on how the firm walked an uneasy line between conflicts of interest and legitimate deal-making, exerted huge influence over governments and had a workplace rife with brutal internal power struggles.
Besides containing detailed interviews with the top brass of the firm as well as its rivals and critics, the book lays bare the manner in which the nexus between politics, business and the bureaucracy operates and how the firm profited by trading on “insider” information about its clients whose interests it was supposed to uphold. As one of those familiar with the ways of those who work out of the Ground Zero of free enterprise capitalism points out, the problem with the crisis through which Goldman Sachs flourished was not so much about what was illegally done but what took place within the purview of law. One small warning: the book is not for the uninitiated; a background in economics, finance or commerce would help.