How Goldman Sachs becomes the most powerful institution in the world

“Money and Power: How Goldman Sachs came to rule the world” by William D. Cohan”

This is a very thorough biography of arguably the most powerful financial institution in the world, Goldman Sachs.

Despite written with the co-operation of the top people at Goldman, it doesn’t censor any wrongdoings and instead it reveals the complete spectrum of the firm from the ugly side of the vampire squid to the absolute masters of the universe, which have mold them into what they are today whether we like it or not.

It reminds me of George Orwell who said “Autobiography is only to be trusted when it reveals something disgraceful. A man who gives a good account of himself is probably lying, since any life when viewed from the inside is simply a series of defeats.” Although this is not an autobiography the logic still applies, and “something disgraceful” are in abundance.

As with any other story of the best of the best, their journey is a very long and treacherous one, from a peddler with a horse-drawn cart to small family business shop selling clothes to sole proprietorship to investment banking novice to growing pains and eventually to the distinguishable master of power and money. And the book captured their story quite magnificently.

It is filled with all the family drama, the infighting with partners, the cheating and backstabbing, the trading scandals, trading successes, the profitless years, the profitable years, the Penn Central fiasco, the sex scandals, civil lawsuits, suicide, succession problems, the high divorce rate, their involvement in propping up financial house of cards of crook Robert Maxwell, the many boardroom battles, the leadership coup, the insider trading cases that look like the episodes of TV series Billions, hostile takeovers, mergers and acquisition wars, the many more deals done by Goldman which often occurred alongside their law firm Sullivan & Cromwell that oftentimes look like the episodes of Suits, and the seemingly minute-by-minute account of the subprime mortgage bubble and crash.

It also filled with the background stories of its larger-than-life characters that are worthy of a TV series, from childhood to the road to Goldman and until their progressive rise from bottom to the very top of the ladder of the company. Characters such as Sidney Weinberg, Gus Levy, Bob Rubin, the two Johns, the new two Johns, Bob Freeman, Steve Friedman, Jon Corzine, Hank Paulson, Lloyd Blankfein – all of whom became a legend in Wall Street -, as well as many other names that became prominent in their own right, such as Christian Siva-Jothy.

The book adds nice little details and plot twists along the way, such as how Goldman Sachs and its arch enemy Lehman Brothers used to be closed allies, the sweet story of how Bob Rubin’s parents met, how the men in Gus Levy’s era acted literally like the Wolf of Wall Street, Senior Partner Sydney Weinberg’s role as advisor for presidents (FDR, Truman, Eisenhower, Kennedy, Johnson), the Goldman-Washington revolving door, how the HR office’s telephone never stops ringing during the “amnesty period” for office extramarital affairs, the endurance test of 20 interviews before recruitment, how they train their new recruits, or how close it was for Goldman Sachs to go bankrupt (several times).

While the way Goldman people themselves explained how they do several trades is nothing short of amazing, the book also paints the many scenes at the trading floor including during the Word War 2 and the free for all trading culture in Goldman’s trading room in the 1990s. And for every investment banking or M&A deals, the book analysed them in minute details.

Moreover, in writing the book, the author, William D. Cohan, uses all the best of the best reference, including the famous “Goldman Sachs: The culture of success” by Lisa Endlich when discussing about the Goldman way, “When Genius Failed” by Roger Lowenstein for the LTCM debacle, “The Big Short” by Michael Lewis for the subprime mortgage crash, and even THAT anti-Goldman Rolling Stones article by Matt Taibbi for the Goldman image problem.

All in all, the coverage feels so rich and complete that by the end of the 611 pages book if the author says “and that’s it, that’s everything covered” I’d believe him.

Ultimately, reading this book is like reading war stories and its brilliant tacticians. The morality and humanity of whether or not we should go to war in the first place is out of the question, and instead as the war is already happening the question now becomes who are the best and what strategies are they using? To that end, in the context of corporate America at its most vicious environment of predatory capitalism, Goldman Sachs emerge as the undisputed master of the game and the rulers of the world. Love it, absolutely love it.