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After seeing the title and hearing the author interviewed on the Daily Show, I almost didnt buy it. I expected it to be an over-simplistic scape-goating of a very complicated financial crisis on one institution that has done things to make itself an easy target. Listening to the introduction reinforced my fears and, if I hadnt spent 2 credits, I might have given up at the end of the introduction.
But, the heart of the book is very-well researched and gives an incredibly textured picture of many of the events it describes. The 1st 3 parts deal with the history of Goldman up until the recent financial crisis. if you are a major Wall Street history buff and have read the memoirs of the key players & other Goldman histories, a fair amount of this might seem repetitive. But, if you are a normal human being, Cohan offers a very well-written narrative of the firm's history that would require you to read a number of other books to get elsewhere.
The 4th part deals with the current (recent?) financial crisis. Despite the title and the intro, it does a great job detailing Goldman's role and showing how many of the things Goldman did limited the magnitude of the crisis and, in fact, represented best financial practices. The reason they made so much money is that almost no one else was behaving rationally. Goldman was early to understand the house of cards on which CDOs rested and they marked their assets accordingly. Though often blamed for causing the crisis, this actually had the effect of holding Wall Street back from even greater irrational exuberance which would have led to an even bigger crisis down the road. Sure some Goldman individuals may have engaged in specific questionable activities, and Cohan doesn't ignore this, but Cohan does a good job of showing how weak the causal relationship between a couple shady decisions and the crisis really is.
The real scandal is that everything Goldman did was LEGAL and Cohan's book gives a textured picture of that.
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The reason to buy this book is for the detailed insights you gain as to how Goldman (alone among the major Wall Street banks) actually prospered during the financial crisis of 2007-2008. The author has done a fine job of describing the key events and decisions that started in December 2006: the push by its mortgage trading desk for authority to put on large short positions when it recognized early signs of serious problems ahead; actions by top management to move early and decisively to reduce long exposure in the subprime mortgage market; and the discipline and focus on risk management at top management levels that forced realistic “mark to market” prices for the mortgage backed securities on its books. As one of the people the author interviewed in research for the book put it, had the other Wall Street banks taken actions similar to what Goldman did, we would not have had a financial crisis in 2008. (That comment, by the way, does not in my view absolve Goldman in any way of irresponsibility for being a large marketer and seller of “subprime” mortgage backed securities prior to 2007. Such securities were based on underlying collateral that was frankly ridiculous and a lasting shame to the parties who originated them, the Wall Street banks who sold them, the ratings agencies who gave them absurd “AAA” ratings, and the federal regulators who simply sat back and watched it all happen.)
The rest of the book is not of the same quality, although it does have a good overview of the history and evolution of Goldman Sachs, including a number of the major leadership figures in the firm over its history as well as bumps in the road it has had to navigate over time. He also includes a number of less well documented impressions of Goldman gathered from competitors, the press, and Congress—many of whom are frankly somewhat dubious sources as to the actual facts. Such sources do, however, serve as good illustrations of why Goldman has suffered some major blows to its public reputation over the past few years.
1 of 1 people found this review helpful