Dec. 1 (Bloomberg) — “I just wrote my first reference for
a gun permit,” said a friend, who told me of swearing to the
good character of a Goldman Sachs Group Inc. banker who applied
to the local police for a permit to buy a pistol. The banker had
told this friend of mine that senior Goldman people have loaded
up on firearms and are now equipped to defend themselves if
there is a populist uprising against the bank.
I called Goldman Sachs spokesman Lucas van Praag to ask
whether it’s true that Goldman partners feel they need handguns
to protect themselves from the angry proletariat. He didn’t call
me back. The New York Police Department has told me that “as a
preliminary matter” it believes some of the bankers I inquired
about do have pistol permits. The NYPD also said it will be a
while before it can name names.
While we wait, Goldman has wrapped itself in the flag of
Warren Buffett, with whom it will jointly donate $500 million,
part of an effort to burnish its image — and gain new Goldman
clients. Goldman Sachs Chief Executive Officer Lloyd Blankfein
also reversed himself after having previously called Goldman’s
greed “God’s work” and apologized earlier this month for
having participated in things that were “clearly wrong.”
Has it really come to this? Imagine what emotions must be
billowing through the halls of Goldman Sachs to provoke the firm
into an apology. Talk that Goldman bankers might have armed
themselves in self-defense would sound ludicrous, were it not so
apt a metaphor for the way that the most successful people on
Wall Street have become a target for public rage.
Common sense tells you a handgun is probably not even all
that useful. Suppose an intruder sneaks past the doorman or
jumps the security fence at night. By the time you pull the
pistol out of your wife’s jewelry safe, find the ammunition, and
load your weapon, Fifi the Pomeranian has already been taken
hostage and the gun won’t do you any good. As for carrying a
loaded pistol when you venture outside, dream on. Concealed gun
permits are almost impossible for ordinary citizens to obtain in
New York or nearby states.
In other words, a little humility and contrition are
probably the better route.
Until a couple of weeks ago, that was obvious to everyone
but Goldman, a firm famous for both prescience and arrogance. In
a display of both, Blankfein began to raise his personal-
security threat level early in the financial crisis. He keeps a
summer home near the Hamptons, where unrestricted public access
would put him at risk if the angry mobs rose up and marched to
the East End of Long Island.
To the Barricades
He tried to buy a house elsewhere without attracting
attention as the financial crisis unfolded in 2007, a move that
was foiled by the New York Post. Then, Blankfein got permission
from the local authorities to install a security gate at his
house two months before Bear Stearns Cos. collapsed.
This is the kind of foresight that Goldman Sachs is justly
famous for. Blankfein somehow anticipated the persecution
complex his fellow bankers would soon suffer. Surely, though,
this man who can afford to surround himself with a private army
of security guards isn’t sleeping with the key to a gun safe
under his pillow. The thought is just too bizarre to be true.
So maybe other senior people at Goldman Sachs have gone out
and bought guns, and they know something. But what?
Henry Paulson, U.S. Treasury secretary during the bailout
and a former Goldman Sachs CEO, let it slip during testimony to
Congress last summer when he explained why it was so critical to
bail out Goldman Sachs, and — oh yes — the other banks. People
“were unhappy with the big discrepancies in wealth, but they at
least believed in the system and in some form of market-driven
capitalism. But if we had a complete meltdown, it could lead to
people questioning the basis of the system.”
There you have it. The bailout was meant to keep the
curtain drawn on the way the rich make money, not from the free
market, but from the lack of one. Goldman Sachs blew its cover
when the firm’s revenue from trading reached a record $27
billion in the first nine months of this year, and a public that
was writhing in financial agony caught on that the profits
earned on taxpayer capital were going to pay employee bonuses.
This slip-up let the other bailed-out banks happily hand
off public blame to Goldman, which is unpopular among its peers
because it always seems to win at everyone’s expense.
Plenty of Wall Streeters worry about the big discrepancies
in wealth, and think the rise of a financial industry-led
plutocracy is unjust. That doesn’t mean any of them plan to move
into a double-wide mobile home as a show of solidarity with the
little people, though.
Cool Hand Lloyd
No, talk of Goldman and guns plays right into the way Wall-
Streeters like to think of themselves. Even those who were
bailed out believe they are tough, macho Clint Eastwoods of the
financial frontier, protecting the fistful of dollars in one
hand with the Glock in the other. The last thing they want is to
be so reasonably paid that the peasants have no interest in
And if the proles really do appear brandishing pitchforks
at the doors of Park Avenue and the gates of Round Hill Road,
you can be sure that the Goldman guys and their families will be
holed up in their safe rooms with their firearms. If nothing
else, that pistol permit might go part way toward explaining why
they won’t be standing outside with the rest of the crowd, broke
and humiliated, saying, “Damn, I was on the wrong side of a
trade with Goldman again.”
(Alice Schroeder, author of “The Snowball: Warren Buffett
and the Business of Life” and a former managing director at
Morgan Stanley, is a Bloomberg News columnist. The opinions
expressed are her own.)
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