Goldman Sachs In Vanity Fair: Andrew Ross Sorkin Details Secret Meetings During Financial Crisis

Add The New York Times' Andrew Ross Sorkin to the list of writers who've pondered the mystery of Goldman Sachs.

The latest issue of Vanity Fair has an excerpt form Sorkin's book Too Big To Fail: The Inside Story Of How Wall Street And Washington Fought To Save The Financial System - And Themselves. In it, Sorkin writes that the government tried to arrange a secret deal for Goldman Sachs to buy Wachovia in the weeks following the implosion of Lehman Brothers. At one point, Sorkin reports, the Federal Reserve even tried to push Citigroup and Goldman into a merger.

[The entire piece is not yet online, but check out Vanity Fair's Q&A with Sorkin here]

Sorkin's reports go further than any other published accounts in establishing a link between the government's actions during the financial crisis and the benefits Goldman Sachs received during the bailout. His piece contains some very damning reports about the behavior of participants in the high-level meetings between the Federal Reserve and the nation's largest banks during the peak of last year's financial collapse.

Specifically, Sorkin reports on direct communication between government officials and Goldman Sachs, and scuttled deals that even caused Warren Buffett to raise an eyebrow. Sorkin quotes Buffett, who was offered to invest in a possible merged Goldman-Wachovia bank:

"By tonight the government will realize they can't provide capital to a deal that's being done by the former firm of the Treasury secretary with the company of a former vice-chairman of Goldman Sachs and former deputy Treasury secretary," Buffett said. "There is no way. They'll all wake up and realize, even if it was the best deal in the world, they can't do it."

Here's more from Vanity Fair's press release:

According to Sorkin, Goldman co-president Gary Cohn had agreed to engage in talks with Wachovia only on the presumption that the Fed would help Goldman guarantee some of Wachovia's most toxic assets. And [Fed governor Kevin] Warsh, in a bold gesture, made a commitment that the Fed would strongly consider it. Paulson spoke with [Goldman Sachs CEO Lloyd] Blankfein and told him to take the talks seriously. "If you go into this looking for all the problems and how much help you're going to get, it's never going to happen," he said, adding, "You're in trouble, and I can't help you." Much to their dismay, Cohn and [Wachovia CEO Robert] Steel spent 24 hours working on a deal that they thought was near closure--and had the support of the Fed--but which ultimately died after Paulson, Bernanke and Geithner decided against pursuing it, in part, because of the "optics" of Goldman's ties to the government. "I'm sorry. I understand--I'm just as frustrated as you are. We just don't have the money; we don't have the authorization," Warsh explained.

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Comments

[yourmonscalling]

07:50 PM on 11/17/2009

And obama said hes going after the corruption LOLOL please Bambi if that's true 95% of the GIGANTIC BAILOUTS would be behind bars but that's not going to happen !!

IS IT MR OBAMA !!!!!!!!!!!!!!!!!!!!!! I KNOW LETS ASK YOUR BIGGEST CAMPAIGN CONTRIBUTOR GOLDMAN SACHS !!!!

ELECTION DAY IS COMING

[Playin Possum]

07:15 PM on 10/04/2009

It just gets weirder and weirder...

[wietog]

10:27 PM on 10/01/2009

Holy shenanigans.

shut the front door!

[not going2take it]

11:47 PM on 09/30/2009

RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO - RICO -
RICO - RICO - RICO - RICO - RICO -

[Tyler-Durden]

04:20 PM on 10/01/2009

Suave?

[ByersL]

11:09 PM on 09/30/2009

Oh Andrew. Are you trying to be as cool as Matt Taibbi? That'll never happen!

[tbone99]

11:07 PM on 09/30/2009

"Specifically, Sorkin reports on direct communication between government officials and Goldman Sachs,"

There needs to be a special investigation done on what is going on between Goldman Sachs and our governemnt .
There is a massive conflict of interest to have ex/employees /agents of Goldman Sachs at the highest levels of government al decision making over finacial matters that affects taxpayer monies. Who is looking out for us when these financial impresarios are looking out for their REAL employer.?

This is just wrong, wrong , wrong!

[CitizenSoul]

11:00 PM on 09/30/2009

This is not surprising at all.

[jerrypl]

10:15 PM on 09/30/2009

If this isn't the smoking gun to prove there was a conspiracy to prop up Goldman Sachs using taxpayer dollars and calling Chicken Little to pass TARP by Bernanke, then I don't know what is. This proves there is an economic crime syndicate with Goldman being one of the bosses and Bada Bing Bernanke being a field general.

Justice needs to use RICO to investigate this one, and go in with auditors and pull Bernanke's harddrives.

http://eye-on-washington.blogspot.com

[indiana46278]

10:35 PM on 09/30/2009

It isn't a smoking gun. Go ahead and read the whole post--not just the headline--and get back to us.

Sorkin, after his extensive reporting, arrives at the conclusion in the VF Q&A, "there was always a genuine effort to do the right thing."

It'll have to be up to angry bloggers who don't read long pieces of text to continue demanding the TRUTH. If the RICO investigated this, as you suggest, would you even read their report? Seems unlikely.

[hopefull252]

10:52 PM on 09/30/2009

This is one piece to a the puzzle. the public now has many pieces and it deserves an investigation of the Fed and Goldman to get the answers.

[tbone99]

11:14 PM on 09/30/2009

"effort to make things look above board" - because they weren't!

Just the fact that there are so many agents from Goldman Sachs first letting the financial sector fail abysmally and then being appointed to fix the disaster which they themselves were responsble for shows that in fact there has been a lack of accountability and an opportunity granted to cover up their total lack of competence.

I have to say between Summers,Bernake, Paulson , Geithner , Greenspan other G. S ex employees its starting to look like a cabal has taken over our economic sector.

[lazercat2008]

10:05 PM on 09/30/2009

Too big to fail. Here comes CIT.

[ErnestineBass]

12:16 AM on 10/01/2009

Ten bucks says Goldman Sachs ends up "buying" BofA, and of course we'll footing the bill.

[venusvictrix]

10:02 PM on 09/30/2009

Does Conde Naste really have some inside track on the inside scoop? Or are they pushing propaganda?

It's odd that Conde Naste publications seem to be getting all these bailout-related stories: Michael Lewis on AIG and the infamous "Jake DeSantis", whose very public resignation letter landed on the front of NYT's business page; Tatler (UK publication) featured a Charlotte Eagar piece on Lehman in September; now Sorkin on GS.

I haven't read Sorkin's piece, but both Lewis and Eagar are very light on facts and sources, and heavy on drama and caricature. I'll be interested to read this latest "story".

[indiana46278]

09:43 PM on 09/30/2009

Here's a hearty defense of Paulson and Goldman.... from Sorkin himself! In the very Q&A linked to above!

"I wouldn't say that Hank Paulson had more power, necessarily, than anybody else. I would say that, in the end, a lot of people have questions about whether the government did the right or wrong thing, and I think that, in the moment, I'm sure you could question lots of different things that were said, but I think you do have to give them an enormous amount of credit for trying. I think there was always a genuine effort to do the right thing. It might not have always worked the way they wanted, but even as you analyze the situation with the government thinking about how to deal with Goldman Sachs—I know there are lots of conspiratorial views about “trying to save Goldman” or this or that—I think in the end they didn't do the deal because they didn't think it was the right thing to do."

Hmmm...

If Sorkin doesn't think his book is "damning," then we must have an eager publicist feeding sensational summaries to blogs who are eating them without scrutiny, or blog editors eager for sensationalism reading what they want to read instead of the actual material or inserting unfounded innuendo into an otherwise balanced report. Or all of the above?

[noweknow]

09:25 PM on 09/30/2009

Corrupt Wall Street and Bush officials were doing it like a corrupt third world banana republic.

[GoingRogue]

09:58 PM on 09/30/2009

"were doing it"? -
When Wall Street started to go bust, who do you think they called first. Of course it was the president of the Federal Reserve Bank of New York - Timothy Geithner.

[lazercat2008]

09:00 PM on 09/30/2009

Hold that thought, here comes CIT.

[SueMVetforObama]

08:54 PM on 09/30/2009

America is no longer a democracy. It is a plutocracy.

It is not a good model for the People.

Left and right should be able to agree on that.

[HMDMSR]

08:58 PM on 09/30/2009

The difficulty is this: how can an authentic democracy turn into a plutocracy? A real democracy would have the economy under the control of the people--because they would demand it. The fact that Americans have never demanded this, is an indication that they were never capable of having a democracy. Democracy is more than having the right to vote. Uninformed votes will not a democracy make.

[Rule Of Law]

03:31 PM on 10/01/2009

Exactly why the founders, Especially Jefferson, were for educating the masses, as opposed to the neo-cons who prefer us ignorant and frightened. As JP Morgan said--

"Capital must protect itself in every way... Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd."

[sparky73]

08:46 PM on 09/30/2009

another thing to thank the Bush Crime family for. Thanks again gerogie!

[ChuckDarwin]

09:07 PM on 09/30/2009

I detest Bush as much as anybody, but this goes a lot deeper than Bush.

[raoul99]

09:11 PM on 09/30/2009

Over 80% of Senate Dems voted for TARP, including Senators Obama and Biden. They deserve you thanks as well.

[sparky73]

01:34 AM on 10/01/2009

they had no choice! obviously cheney was playing some sort of game with them. Do not blame left on this. This has Reagan written all over it!