The Senate sub-committee hearing on Just How Evil Is Goldman Sachs, ongoing for a few hours now, is numbing and ridiculous and unintelligible. Alternately I have the impression that the people asking the questions and the people giving the answers have no idea what they're talking about. The constant use, by the questioning politicians, of the idea and model of "gambling" in relation to what Goldman Sachs does is somewhat disturbing. Goldman Sachs is, at heart, a math organization. What happens there is that thousands of incredibly bright math-oriented folks are modeling and running numbers constantly, and when the numbers seem worthwhile, choices are made. It's like gambling only if you were playing blackjack with shoe composed of several thousand decks of cards with a dozen people counting cards and running probability numbers for you. John Ensign is particularly a moron, it seems to me. ("In Las Vegas people know the odds are against them," he said. "On Wall Street they manipulate the odds while you're playing the game… much more dishonest.") This is grandstanding and, to say the least, not helpful. What did strike me as interesting in the documents released by the Senate were the performance reviews. They are pretty absurd.
These are from end of year 2007. Here is self-review filed by Daniel Sparks, a Managing Director at Goldman:
I delivered the best performance of my career this year to the firm. I led a great team through an incredibly volatile and challenging market, we had to change business approaches dramatically and constantly, we levered the firm's support, and we didn't just survive – we excelled. Below I have listed significant contributions and accomplishments.
No, how do you REALLY feel about yourself? And when MD Joshua Birnbaum filed his own self-review, his only criticism of himself was essentially that no one would listen to him and he should have insisted about how he was right more often: "As a leader with significant experience quantifying and managing a wide range of mortgage risks, I could have spoken even louder and tried to piece together something to support my assertion that other areas were quite long and in need of incremental hedges."
And MD Michael Swensen:
It should not be a surprise to anyone that the 2007 year is the one that I am most proud of to date. I can take credit for recognizing the enormous opportunity for the ABS synthetics business 2 years ago. I recognized the need to assemble an outstanding team oftraders and was able to lead that group to build a number one franchise that was able to achieve extraordinary profits (nearly $3bb to date).
You can see the Goldman thing poking through-"Though this extraordinary year is attributable to a total team effort, my commercial contributions over the past year are numerous."-but even while they make nods toward emphasizing teamwork and the group, the big boys just can't stop sucking up for extra bonus cash. They're so unanalytical and so unforthcoming, it makes a joke of the company's intense review structure-and that to me, reflects more poorly on them than the emails with swearwords in them. (OMG swearwords! In a work email! Can you imagine? Oh right you can.) I know it's pretty common corporate practice, this sort of horn-blowing-and it's probably much worse at other finance firms!-but to me, it just seems sad and pitiful.