Money and Power (110 page)

I also want to thank my in-laws and relatives, the Futters and Shutkins, in toto, as well as various other Cohans and Hiekens, also in toto. My parents, Suzanne and Paul, as well as my brothers, Peter and Jamie, and their wives and families, continue to be hugely supportive of me, and I thank them, again and again and again (as in every day).

To Joy Harris, my dear friend and literary agent, who has stood by me now for three of these tomes (and hopefully many more to come), I cannot thank you enough. And yet, I still try.

Then there is my amazing, loving, supportive, and nurturing family, Deb Futter, Teddy Cohan, and Quentin Cohan. Once again, I could not have done it without you. I love you all very, very much.

Needless to say, any errors in fact, of omission or commission, are my responsibility alone.

Abbreviations

Prologue: The Pyrrhic Victory

1.
“a cunning cat”: Martin A. Armstrong,
Looking Behind the Curtain: The “Real” Conspiracy,
April 9, 2009.

2.
“a great vampire squid”: Matt Taibbi,
Rolling Stone
, July 9–23, 2009.

3.
the “angriest”: Jonathan Alter,
The Promise: President Obama, Year One
(New York: Simon & Schuster, 2010), p. 314.

4.
“lip-synching capitalism”: Ibid.

5.
“substantial profit”: Letter from Lloyd Blankfein to John Fullerton, April 27, 2009.

6.
“I live ninety-eight percent of my time”: Lloyd Blankfein’s comments at a breakfast sponsored by
Fortune
magazine on October 15, 2009.

7.
In a separate interview: Lloyd Blankfein interview with the author.

8.
“I try to understand why it is”: Senator Levin interview with the author.

9.
“People are angry”: Letter from Lloyd Blankfein to John Fullerton, April 27, 2009.

10.
“[Y]our personally owned shares”: Letter from John Fullerton to Lloyd Blankfein, December 31, 2009.

11.
“They did not get it”: Jim Cramer interview with the author.

12.
“Of course I feel a huge responsibility”: Lloyd Blankfein interview with the author.

13.
“What has been a great awakening”: Michael Greenberger interview with the author.

14.
The various Goldman Sachs internal e-mails in this chapter were released publicly by Senator Carl Levin (D-Michigan) as part of the April 27, 2010, hearing “Wall Street and the Financial Crisis: The Role of the Investment Banks” before the United States Senate Permanent Subcommittee on Investigations. The testimony from that hearing is taken from the publicly released transcripts of the April 27, 2010, hearing.

Chapter 1: A Family Business

1.
“he quickly set off”: Stephen Birmingham,
Our Crowd: The Great Jewish Families of New York City
(New York: Harper & Row, 1967).

2.
“had supported herself quite nicely”: Ibid.

3.
Account of the transaction between Frederick Douglas, “A. Cramer,” and “Carl Wolff” is from
NYT,
March 19, 1886.

4.
Account of the loan to N. J. Schloss & Co. is from
NYT,
December 6, 1893, and December 9, 1893.

5.
“well nigh penniless”:
NYT,
December 21, 1891.

6.
“always charitable to a degree”: Ibid.

7.
“From the very first moment”: Lisa Endlich,
Goldman Sachs: The Culture of Success
(New York: Touchstone, 2000), p. 35.

8.
“My boy, you come home and go to work”: WSOH, 1956, p. 22.

9.
“It was more or less blazing a trail”: WSOH, 1964, p. 218.

10.
“That Sears business”: Ibid., pp. 33–34.

11.
“Frank Woolworth”: Ibid., pp. 96–97.

12.
“commercial banking all over the world”: Transcript of the January 6, 1914, public hearing in New York City regarding the establishment of the New York Federal Reserve Bank.

13.
“The word ‘aid’ ”: Ibid.

14.
“The reserve power”: Ibid.

15.
“Well, I guess I am out of step”: Ibid., p. 39.

16.
“I am not in sympathy”: Endlich, pp. 42–43.

17.
“to give his services”: WSOH, 1956.

18.
“two or three investments”: Ibid.

19.
“Being a Jew”: Ibid., p. 40.

20.
“Henry Goldman was an extraordinary personality”: Ibid., p. 41.

21.
“suave and polished Southerner”: WSOH, 1956.

Chapter 2: The Apostle of Prosperity

1.
“tall, slender, unassuming”:
NYT,
January 1, 1968.

2.
“lack of adequate banking facilities”:
NYT,
February 13, 1910.

3.
“For the next three years”:
Time,
September 14, 1925.

4.
“had casually explained”:
NYT,
January 1, 1968.

5.
“If business is to continue zooming”: Ibid.

6.
“business cycle was dead”: Lisa Endlich,
Goldman Sachs: The Culture of Success
(New York: Touchstone, 2000), p. 44.

7.
“Catchings was a brilliant person”: WSOH, 1956, p. 43.

8.
“such great companies”: Ibid, p. 44.

9.
“In those days”: Ibid.

10.
“Our business had grown so”: Ibid., p. 45.

11.
“there weren’t enough”: John Kenneth Galbraith,
The Great Crash, 1929
(New York: Mariner Books, 2009, paperback reprint edition), p. 43.

12.
“Historians have told with wonder”: Ibid., p. 49.

13.
“The stock is said to have sold”: Ibid.

14.
“As a promotion”: Ibid.

15.
“And the management of the trusts”: Ibid., p. 47.

16.
“only when the tide goes out”: Warren Buffett, “Chairman’s Letter,”
Berkshire Hathaway 2001 Annual Report.

17.
“[R]arely, if ever, in history”: Galbraith, p. 60.

18.
“This remarkable premium”: Galbraith, p. 61.

19.
“sufficient to constitute working control”:
Trust,
p. 589.

20.
“on the ground that it preferred”: Ibid.

21.
Information from the GSTC prospectus: Ibid., p. 590.

22.
“give the clients and customers”: Ibid., p. 591.

23.
“other banking houses”: Ibid.

24.
“Throughout the whole period”: Ibid.

25.
“build them up”: Ibid., p. 592.

26.
“might possibly at times”: Ibid.

27.
“was not even remotely”: Ibid.

28.
“[A]fter discussing the matter”: Ibid., p. 596.

29.
“Two of my associates”: Ibid., p. 597.

30.
“done a great deal of business”: Ibid., p. 599.

31.
“prestige and standing”: Ibid., p. 600.

32.
“in connection with the proposed acquisition”: Ibid., p. 610.

33.
“a tremendous hullabaloo”: Ibid., p. 611.

34.
“[I]t is apparent that”: Ibid., p. 623.

35.
“I never regarded that we had”: Ibid., p. 625.

36.
“The market value for its own stock”: Ibid., pp. 626–27.

37.
“buying actually improves the market”: Ibid., p. 613.

38.
“I tell you with great positiveness”: Ibid., p. 614.

39.
“The spring and early summer”: Galbraith, p. 61.

40.
“had gone outside its legitimate”:
NYT,
April 4, 1929.

41.
“Goldman Sachs by now”: Galbraith, p. 62.

42.
Goldman Sachs Trading Corporation was worth:
NYT,
August 20, 1929, p. 84.

43.
“[T]he nearly simultaneous”: Galbraith, p. 64.

44.
“Well, this is just absolutely crazy”: WSOH, 1956, p. 49.

45.
“The trouble with you, Walter”: Ibid.

46.
“I remember that day very intimately”: Studs Terkel,
Hard Times: An Oral History of the Great Depression
(New York: New Press, 2000), pp. 72–74.

47.
“secure a divorce”:
NYT,
February 28, 1930.

48.
“beginning, in 1930, to show”: WSOH, 1956, p. 46.

49.
“Weinberg and I talked together”: Ibid., p. 46. Sachs described the entire incident in his oral history.

50.
“In those days”: Ibid., p. 47.

51.
“[We] could hold up our heads”: Ibid., p. 48.

52.
“the loudest prophet of the New Era”:
Time,
August 21, 1933.

53.
“Well, that was very nice”: WSOH, 1956, p. 49.

54.
“There were all kinds of stockholders’ suits”: Ibid., p. 50.

55.
the last one of which did not get settled:
NY,
November 10, 2008.

56.
“The margin clerk for Goldman Sachs”: Among other sources,
NYT,
July 29, 1969.

Chapter 3: The Politician

1.
“great rehabilitation”: WSOH, 1956, p. 51.

2.
“Don’t imagine for a moment”: Ibid., p. 53.

3.
“In the ’29 crash the name Goldman”: “Let’s Ask Sidney Weinberg,”
Fortune
, October 1953, p. 174.

4.
“We faced the music”: WSOH, 1956, p. 81.

5.
“His mind began to fail with age”: Ibid., p. 52.

6.
“I was perfectly frank”: Ibid., p. 82.

7.
“that people began”: Ibid., p. 53.

8.
“kewpie doll”: E. J. Kahn Jr., “Director’s Director,”
NY,
September 8, 1956, p. 39.

9.
“hustled his way”:
NYT,
July 29, 1969.

10.
“half a pint of whisky”:
Time,
December 8, 1958.

11.
“finding this no strain”:
NY,
September 15, 1956, p. 62.

12.
“Then he lost”: Ibid.

13.
“To whom it may concern”:
NYT,
July 29, 1969.

14.
“for accuracy”:
Fortune,
October 1953.

15.
“In Sing Sing”:
NY,
September 15, 1956, p. 60.

16.
“Sometimes you don’t know”:
Fortune,
October 1953.

17.
“feather horse”: Ibid.

18.
“What’s a panic?”:
NYT,
December 16, 1967.

19.
“had given his heart”: Ibid.

20.
“Do you need a boy?”:
NYT,
February 8, 1942.

21.
“Weinberg remained”:
NY,
September 15, 1956, p. 65.

22.
“Ever try to carry”:
NYT,
December 16, 1967.

23.
“One course they offered”: Ibid.

24.
“Paul Sachs was the first partner”:
NY,
September 15, 1956, p. 65.

25.
“knowing everybody”:
NYT,
December 16, 1967. This article also describes his World War I service.

26.
“He has since become”:
NY,
September 15, 1956, p. 66.

27.
“Unless you can make one”:
NYT,
December 16, 1967.

28.
“It was my own money”: Ibid.

29.
“I just wasn’t very bright”:
Fortune,
October 1953.

30.
“I guess you must have run”:
NY,
September 15, 1956, p. 69.

31.
“I’m an investment banker”:
NYT,
December 16, 1967.

32.
Account of Weinberg in Akron, Ohio, is from
NY,
September 8, 1956, p. 42.

33.
“clubhouse Democrat”:
Fortune,
October 1953.

34.
“The Street was against Roosevelt”: Studs Terkel,
Hard Times: An Oral History of the Great Depression
(New York: New Press, 2000), pp. 72–74.

35.
“I cannot tell you”: Letter from Sidney Weinberg to Franklin Roosevelt, November 9, 1932.

36.
“you might wish to have”: Letter from Sidney Weinberg to Franklin Roosevelt, January 18, 1933.

37.
“He was pleased to have this”: Letter from Louis Howe to Sidney Weinberg, February 23, 1933.

38.
“intimate friend”: Letter from Sidney Weinberg to Louis Howe, December 6, 1932.

39.
Paul M. Clikeman’s account of what happened at McKesson & Robbins is found in “The Greatest Frauds of the (Last) Century,” a monograph in the May 2003 issue of
New Accountant USA.

40.
“I’m for McKesson”:
NY,
September 8, 1956, p. 48.

41.
“Well, come on, gentlemen”:
Fortune,
October 1953.

42.
“gave Sidney some uncomfortable moments”: Ibid.

43.
“pointed out to him”:
NY,
September 8, 1956, p. 48.

44.
“My partner”: WSOH, 1956, p. 122.

45.
“Sidney Weinberg has this alchemy”:
Fortune,
October 1953.

46.
“gourmand’s appetite”:
NY,
September 15, 1956, p. 49.

47.
“an ambassador”:
BusinessWeek,
January 27, 1951.

48.
“many grimly intransigent”:
NY,
September 15, 1956, p. 49.

49.
“entirely personal”: Letter from Sidney Weinberg to Stephen Early, July 5, 1938.