Jesse Walker of Reason on Gary Allen
Worth Reading, Mostly Economics, for April 25, 2010

DeLong Smackdown Watch: Felix Salmon on the Hazards of Living in the Distant Past

Felix Salmon says that when he claims Goldman Sachs "generally lived up to its mantra of "long-term greed": Do right by your clients, the idea went, and ultimately you will do very well by yourself..." he was talking about the 1990s, while I am talking about earlier years--the 1970s or the 1930s.



The Goldman wars continue | Analysis & Opinion |: Finally on Goldman I should mention that I have a piece in the Washington Post today explaining just how bad the SEC charges are for its reputation. The economic historian Brad DeLong has a learned response, saying that Goldman never really had the reputation that I’m claiming it had:

Felix Salmon thus, I think, mistakes the business of Goldman Sachs. The old House of Morgan was an investment bank interested in building long-term relationships. Goldman Sachs is instead about doing deals and having the knowledge, sophistication, and intelligence so that it can do the deals with greater ease than anybody else–but it won’t protect you from itself, and won’t protect you from yourself.

I didn’t really have the pre-war years in mind, of course, but Brad does have a good point, and there were other shops, like Lazard and Rothschilds, which probably had a better reputation in terms of long-term client service than Goldman had in the 1990s. Still, when it came to the big investment banks, Goldman was at the top of the heap: its clients trusted it more than they trusted, say, Bear Stearns or Merrill Lynch. And it’s lost a lot of that reputation now.