Will make some money on this to reflect the turmoil

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will make some money on this to reflect the turmoil in the world, but we’re not going to rip your eyeballs out.” Goldman Sachs made it much harder, almost impossible, for clients to get their money back. Putting an extremely stringent interpretation on the “break clauses” in the funding trade contracts, Goldman offered the clients far less than the other banks. This burned bridges with a number of important institutional clients. Even today, there are large clients across Europe, the U.S., and Asia who hold a grudge against the firm because of its behavior then. “Our assets are our people, capital, and reputation. If any of these is ever diminished, the last is the most difficult to restore.” That is Goldman Sachs’s second business principle. But a comment made during the crisis by a European partner summed up the latter-day evolution of Goldman’s business principles. A number of sales colleagues had grown frustrated with our traders’ unwillingness to make a fair price for clients who wanted out during the teeth of the crisis, so they approached one of the partners in charge. “If I have to choose between my reputation and my P&L, I choose my profit-and-loss,” the partner said back to them. “Because I can ultimately recover my reputation, but if I lose a lot of money, I can’t recover that.” ——— In April 2008, a couple of weeks after the fall of Bear Stearns, I got on a plane and flew across the Pacific to visit several important clients in Asia. I traveled with another Goldman VP and with a partner named Brett Silverman. Brett had joined Goldman after business school and had made his name trading blue-chip technology stocks, such as Microsoft, during the peak of the Internet bubble. He was a culture carrier who had made partner by age thirty-seven. After the customary formal greeting, we met with the first set of clients in their offices, high above the Asian capital, with amazing panoramic views all around. As usual, the clients—five of them in all, heads of portfolio management and risk management among them—lined up on one side of the table. The three of us were on the other side. We waited for them to sit down before taking our seats. The head of the fund seemed uncertain. “What does Goldman Sachs think?” he asked Silverman. “Are we out of the woods? Is the worst over?” Brett looked the client in the eye. “I’m very bullish,” he said. “I think this is an anomaly. I think things are going to get much better. I’d be buying the market if I were you.” Meaning he’d be buying stocks. I sat there surprised, thinking about the strangeness of Brett’s statement: from all I’d seen and heard, there was not a lot of evidence to suggest such optimism. Was he being naïve? Strange to apply that word to a Goldman Sachs partner, a man ten levels above me, making (at a guess) at least $5 million a year, but that was how it seemed to me at the time.
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