On September 4th, the French-German Television channel, Arte, will show a documentary based on the book The Bank: How Goldman Sachs Rules the World by London-based correspondent for Le Monde, Marc Roche. Last week I spoke with Mr. Roche and co-director of the film Jerome Fritel in London and Paris, respectively, about the new documentary. Every time I think I have heard enough of how bad the banks are and what new thing has been discovered on or off their books, and proven to be legal, if immoral, I am always surprised by how far certain players go to make a profit.
This surprise was amplified while watching the documentary by Mr. Fritel and Mr. Roche. Former U.S. Senator, Ted Kaufman, states in the film "Nothing has changed." He speaks of the arrogance of the bankers, and I am reminded of how, in certain circles, people seem to truly be cut off from reality. It is as if the gap between the wealthiest and the rest of the planet has become so distorting that those at the top do not even see what is happening outside of their circle. A former Goldman Sachs banker compared how Goldman Sachs had been run pre-mathematician heyday to "... entering the Jesuit order." And it is this very closed, secretive way of controlling information which has given way to conspiracies and misunderstandings.
Both the author of the book and the director of the documentary said that they wanted to stay away from any kind of conspiracy and really understand how Goldman Sachs became so powerful. But what they found was that there was, as with the mafia, a kind of silence or "omerta." Either someone had once been part of it and would not speak on camera (though many who opened up in the book refused to for the camera) or they did not work with Goldman Sachs -- but might need to one day. The former head of the European Central Bank, as well as the present head, would not go into detail about the links to Goldman Sachs and -- in the case of the former -- simply would not speak of it on camera.
Not only was the U.S. Treasury during the Bush Jr. years (and leading up to and during the first months of the financial crisis) strongly linked to Goldman Sachs, but several heads of Europe's bureaucracy and financial decision-makers have also done their time in the school of Goldman Sachs. Mario Draghi, the head of the European Central Bank, had previously been invited into Goldman Sachs at the very top of the hierarchy as a partner, and was given very "sensitive" financial products to sell, stated Marc Roche. Mario Monti, the unelected head of Italy, is also linked with Goldman Sachs as an advisor, as was the Prime Minister of Greece from 2011-2012, Lucas Papademos. How much did Goldman's helping keep Greece's debts off the books later set it up for failure inside the EU, acting as a Trojan horse for the entire collective? Who knew what when? Who had access to sensitive information? These questions are asked, but we are left with the feeling that we will never know the full and complete truth.
That leads us to the real conundrum -- the growing lack of trust, not only for banks such as Goldman Sachs, but for all banks. This lack of confidence is the real problem with the crisis, as even good projects and strong balance sheets cannot find credit.
What is different about this documentary is that it is not told from an Anglo-American perspective, where certain approaches to banking are assumed, but rather is questioning those very assumptions which are finally being looked at more closely in the U.S. not just by regulators (and former regulators such as Prof. William Black, who is interviewed in the documentary) but by those who actually made their living in the financial sector. Some of the best interviews are from those who are called by Jerome Fritel the Repentant Ones, those who worked within the system or, as in the case of interview subject, Nomi Prins, actually worked in the higher echelons of Goldman Sachs, who gives a powerful interview when she describes why she quit after 9/11. She speaks of being on the trading floor at Goldman Sachs in New York while traders were told by a higher up to continue trading as they were dealing with airlines, fuel oil for planes, things which would be affected by the events of 9/11. The terror of what was happening not so far away from where she was working, and the cold, inhuman reaction of the traders and the executives struck her as so disturbing she no longer wanted to be part of it.
Another ex-Goldman Sachs employee, Bethany McLean, now works as a journalist and goes into detail about how Goldman Sachs has built a web of influence in Washington, D.C. We know this now, but it has not changed much. President Obama has spoken about it and lost some campaign funding from the sector, but nothing has really changed. Regulators have been cut back or have included former Goldman Sachs people such as Gary Gensler, regulating his tennis buddy and former Goldman Sachs pals at MF Global. This is simply outrageous and nothing has changed!
Watching this documentary from France it appears even more disturbing, as people here still expect there to be more of a fire wall between speculative banks and the government, even if that is not the case and banks here, as well, have been saved by tax-payer monies -- and the overlap behind the scenes between the financial world and the Elysee was quite well known, especially under former President Sarkozy. But in Europe, sometimes this criticism of speculation goes too far. The author of the book, Marc Roche, described to me disturbing events surrounding his book tours in Greece, Spain and Portugal, where questions were asked which were openly anti-Semitic. This reminded me of a dinner I had in New York the week Lehman fell, where I sat with a group of late twenty-something males at a table a Nobu as they talked about the crisis. One was the son of one of the heads of a major investment bank, the others the sons of CEOs of major U.S. companies. One of them said to the other, "They are going to blame us." We did not have to ask who they nor us were... it was understood. And sadly, in some parts of Europe and elsewhere, the blaming becomes scapegoating, and I am frightened by the fact that history could so easily be forgotten, especially here on the continent where such a horrible, destructive time during which people were destitute, hungry and looking for scapegoats ended in war.
If it is true we are sleepwalking into a depression worse than we have known before, we must wake up quickly, or, as they move the Roma encampments out of France this week, we can be sadly reminded of the following:
First they came for the socialists,and I didn't speak out because I wasn't a socialist.
Then they came for the trade unionists,and I didn't speak out because I wasn't a trade unionist.
Then they came for the Jews,and I didn't speak out because I wasn't a Jew.
Then they came for me,and there was no one left to speak for me.
Speak up people, and Goldman Sachs, learn to communicate better and more openly, as all banks should, so that the discussion about the morality of business is one in which we all take part. Capitalism is meant to build strong economies and economies are made up of individuals, not simply a few wealthy folks at the top.