Yesterday we learned that Goldman Sachs increased their Chairman and Chief Executive Officer's compensation for 2010 to $19 million, almost double that of the prior year. In addition Blankfein received $27 million from investments in private equity and hedge funds managed by the firm. And yet, under Blankfein's ministrations a once great name has been relegated to the dustbin of a different time and a different era.
Quite incredibly, these past few days we were regaled with a Goldman imbroglio that would have been impossible in an earlier era. After the myriad highly questionable Goldman forays over the past few years ranging from the notorious Abacus financial instruments allegedly designed to fail, their $23 billion bonus pool at a time when millions of Americans were losing jobs and homes, their apparent preferential treatment in the sum of billions from the AIG bailout, their massive crude oil speculation, and so on (please see "Facebook and Goldman Sachs"). Then this past week we were made aware of a new incidence of Goldman high handedness that previous Goldman leaders such as Sidney Weinberg and Gus Levy would not have countenanced even if they had been threatened with being thrown into the East River with lead soled shoes.
On January 6th CNBC wrote "Wall Street Wonders if Goldman Will Double-Cross Facebook", wondering out loud whether Goldman's insinuation into the Facebook financing was simply a backdoor maneuver to engineer and piggyback on a Facebook public offering. Well the issue is still in play and the outcome not yet determined.
Had the same question been revised and updated last week to "Wall Street Wonders if Goldman Sachs Will Double-Cross Clearview Corp" the answer would have been a resounding yes. According to the Wall Street Journal ("Goldman Switch Irks Clearview Directors" 03.28.11), Clearview Corp. hired Goldman last summer to advise them on Clearview's most urgent strategic issue: how to respond to Sprint Nextel's offer to purchase the company.
That was last summer. Now we learn that in February Goldman advised Clearview they were resigning their mandate. To work for who? You guessed it. An answer that would have in all likelihood been unthinkable at another time, for another Goldman,Sachs.
Yes. Blankfein's Goldman had resigned their Clearview mandate to work for Sprint Nextel. In the rest of the business world, but sadly perhaps not on today's Wall Street, that would be called a flagrant breach of 'customer trust.' And not only is it a matter moral turpitude, as the Wall Street Journal pointed out, when a firm is hired "its bankers typically have access to the clients financial information and strategic plans. The fear among corporations is that information can leak on purpose or unintentionally to the other side of the negotiation."
The old Goldman Sachs was revered and respected as the toughest of competitors on a level playing field. Under the co-leadership of John L. Weinberg and John C. Whitehead the principles of conduct were succinctly set forth echoing the abiding parameters of the storied Sidney Weinberg and Gus Levy's way of getting business done. They were clearly set forth as fourteen principles meant to serve as the firm's bedrock signposts of doing business and relationships to the field. The first four of these were:
- Our clients interests always come first
- Our assets are our people, capital and reputation
- Our goal is to provide superior returns to our shareholders
- We take pride in the professional quality of our work
Much seems to have been lost in translation in its latest incarnation whereby point 3 appears to have trumped all the others at Goldman and at so much of Wall Street. Where are the managers to set things right again and those to replace the directors who let it happen?
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