Arming Goldman With Pistols Against Public: Alice Schroeder
http://www.bloomberg.com/apps/news?pid=20601039&sid=ahD2WoDAL9h0
Commentary by Alice Schroeder
Dec. 1 (Bloomberg) -- “I just wrote my first reference for a gun
permit,” said a friend, who told me of swearing to the good character of
a Goldman Sachs Group Inc. banker who applied to the local police for a
permit to buy a pistol. The banker had told this friend of mine that senior
Goldman people have loaded up on firearms and are now equipped to defend
themselves if there is a populist uprising against the bank.
I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true
that Goldman partners feel they need handguns to protect themselves from
the angry proletariat. He didn’t call me back. The New York Police
Department has told me that “as a preliminary matter” it believes some
of the bankers I inquired about do have pistol permits. The NYPD also said
it will be a while before it can name names.
While we wait, Goldman has wrapped itself in the flag of Warren Buffett,
with whom it will jointly donate $500 million, part of an effort to burnish
its image -- and gain new Goldman clients. Goldman Sachs Chief Executive
Officer Lloyd Blankfein also reversed himself after having previously
called Goldman’s greed “God’s work” and apologized earlier this
month for having participated in things that were “clearly wrong.”
Has it really come to this? Imagine what emotions must be billowing through
the halls of Goldman Sachs to provoke the firm into an apology. Talk that
Goldman bankers might have armed themselves in self-defense would sound
ludicrous, were it not so apt a metaphor for the way that the most
successful people on Wall Street have become a target for public rage.
Pistol Ready
Common sense tells you a handgun is probably not even all that useful.
Suppose an intruder sneaks past the doorman or jumps the security fence at
night. By the time you pull the pistol out of your wife’s jewelry safe,
find the ammunition, and load your weapon, Fifi the Pomeranian has already
been taken hostage and the gun won’t do you any good. As for carrying a
loaded pistol when you venture outside, dream on. Concealed gun permits are
almost impossible for ordinary citizens to obtain in New York or nearby
states.
In other words, a little humility and contrition are probably the better
route.
Until a couple of weeks ago, that was obvious to everyone but Goldman, a
firm famous for both prescience and arrogance. In a display of both,
Blankfein began to raise his personal- security threat level early in the
financial crisis. He keeps a summer home near the Hamptons, where
unrestricted public access would put him at risk if the angry mobs rose up
and marched to the East End of Long Island.
To the Barricades
He tried to buy a house elsewhere without attracting attention as the
financial crisis unfolded in 2007, a move that was foiled by the New York
Post. Then, Blankfein got permission from the local authorities to install
a security gate at his house two months before Bear Stearns Cos. collapsed.
This is the kind of foresight that Goldman Sachs is justly famous for.
Blankfein somehow anticipated the persecution complex his fellow bankers
would soon suffer. Surely, though, this man who can afford to surround
himself with a private army of security guards isn’t sleeping with the
key to a gun safe under his pillow. The thought is just too bizarre to be
true.
So maybe other senior people at Goldman Sachs have gone out and bought
guns, and they know something. But what?
Henry Paulson, U.S. Treasury secretary during the bailout and a former
Goldman Sachs CEO, let it slip during testimony to Congress last summer
when he explained why it was so critical to bail out Goldman Sachs, and --
oh yes -- the other banks. People “were unhappy with the big
discrepancies in wealth, but they at least believed in the system and in
some form of market-driven capitalism. But if we had a complete meltdown,
it could lead to people questioning the basis of the system.”
Torn Curtain
There you have it. The bailout was meant to keep the curtain drawn on the
way the rich make money, not from the free market, but from the lack of
one. Goldman Sachs blew its cover when the firm’s revenue from trading
reached a record $27 billion in the first nine months of this year, and a
public that was writhing in financial agony caught on that the profits
earned on taxpayer capital were going to pay employee bonuses.
This slip-up let the other bailed-out banks happily hand off public blame
to Goldman, which is unpopular among its peers because it always seems to
win at everyone’s expense.
Plenty of Wall Streeters worry about the big discrepancies in wealth, and
think the rise of a financial industry-led plutocracy is unjust. That
doesn’t mean any of them plan to move into a double-wide mobile home as a
show of solidarity with the little people, though.
Cool Hand Lloyd
No, talk of Goldman and guns plays right into the way Wall- Streeters like
to think of themselves. Even those who were bailed out believe they are
tough, macho Clint Eastwoods of the financial frontier, protecting the
fistful of dollars in one hand with the Glock in the other. The last thing
they want is to be so reasonably paid that the peasants have no interest in
lynching them.
And if the proles really do appear brandishing pitchforks at the doors of
Park Avenue and the gates of Round Hill Road, you can be sure that the
Goldman guys and their families will be holed up in their safe rooms with
their firearms. If nothing else, that pistol permit might go part way
toward explaining why they won’t be standing outside with the rest of the
crowd, broke and humiliated, saying, “Damn, I was on the wrong side of a
trade with Goldman again.”
(Alice Schroeder, author of “The Snowball: Warren Buffett and the
Business of Life” and a former managing director at Morgan Stanley, is a
Bloomberg News columnist. The opinions expressed are her own.)
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