If you have not had your fill of nonfiction pieces wherein the author relives some week in 2008 that remade the financial system in ways not seen until some other week in 2008; if you're hungry to read 12,000 words about hysterical fancy lads acting like tough guys; and especially if you have a high tolerance for male glamour shots -- this time featuring all the architects of the credit collapse posed in artsyfartsy monochrome -- you may like Andrew Ross Sorkin's celebrated account of the government's efforts to rescue Goldman Sachs and Morgan Stanley.
Former Treasury Secretary Henry Paulson, who appears to have cooperated on this story and on another that-was-the-week commemoration that ran in The New Yorker a few weeks ago, is taking image management seriously. So it's sad to report that Sorkin's narrative presents the most straightforward case yet that Paulson abandoned any sense of public duty in order to save his former Goldman Sachs colleagues. The Tell is how paranoid the people around Paulson, and occasionally Paulson himself, are that the public might object to a government intervention on behalf of the investment banks.
I've seen this fear of the appearance of conflict of interest before. It never translates into any concern that you might actually have a conflict of interest and thus shouldn't be doing what you want to do. That pattern holds here: At several points in Sorkin's story, officials who used to work at Goldman or Morgan, who have multiple professional and personal overlaps with the firms, are quickly granted waivers from Treasury and Fed conflict-of-interest rules so they can help out their old allies. Hypocrisy being the tribute vice pays to virtue, we should probably be grateful that anti-conflict niceties exist at all. But it's just the old constitution-is-not-a-suicide pact dilemma: The rules exist right until the moment they're actually needed; then you suspend the rules.
There's also some hilarious what's-good-for-me-must-be-good-for-America self-delusion. Bailout ringleaders are repeatedly commended for their patriotism. At one point, Goldman traders rise to sing "The Star-Spangled Banner" after the regulator in the United Kingdom bans short-selling of Goldman stock.
And there's a priceless example of how arrogant and threatening a person can be when he knows the government will keep him on his perch. Dig this exchange between Goldman Sachs co-president Gary Cohn and a hedge fund manager:
Stanley Druckenmiller, a George Soros acolyte worth more than $3.5 billion, had taken most of his money out earlier that week, concerned about the firm's solvency. If word got around that a hedge-fund manager of Druckenmiller's reputation had lost confidence in Goldman, that alone could cause a run. Cohn called him and tried to persuade him to return the money to the firm. "I have a long memory," Cohn, who was taking this personally, told Druckenmiller, in whose honor he had even once hosted a charity cocktail party. "Look, the one thing I'm doing is I'm learning who my friends are and who my enemies are, and I'm making lists."
Druckenmiller, however, was unmoved. "I don't really give a shit-it's my money!" he shot back. Unlike most hedge funds, Druckenmiller's consisted primarily of his own money. "It's my livelihood," he said. "I've got to protect myself, and I don't really give a shit what you have to say."
"You can do whatever you want," Cohn said in carefully measured tones. But, he added, "this will change our relationship for a long time."
You might want to skip the opening paragraphs. They include a vomit-inducing early-morning epiphany by then-chairman of the New York Fed Tim Geithner, who sees a ferry bringing back-office workers from New Jersey and realizes that, damn it, he's doing it all for the Common Man.
But speaking of vomit induction, here's another reason to read the rest: Paulson actually does puke later in the story. Seriously.