Across the middle of the page are these words: "Is Goldman Sachs Evil?"
That's the sort of question that was not being asked in polite company before the economic downturn. Back then, Goldman was seen as one of the prime drivers of capitalism, a company staffed by men whose generous compensation was justified by their role in helping power the economy to never before seen levels – something that brought wealth to millions of Americans.
That was then. And this, it seems, is now. Matt Taibbi's began his July "Rolling Stone" story on Goldman by writing that "the world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
That's just the opener: Taibbi goes on to blame Goldman for essentially creating numerous economic bubbles and busts in service of the greedy ends of its "gangster" employees, who manipulated everything from tech stocks to gas prices with little concern for what effect their reckless speculation might have on the rest of us.
Taibbi's article was knocked in some quarters as naïve and reactionary –"a joke" written by "the Sarah Palin of journalism" – and some of the criticisms are legitimate. But even if one can quibble with the details, it's undeniable that Taibbi tapped into a populist rage against a company unused to such negative attention. And the fact that the story appeared in a pop-culture magazine – the Jonas Brothers graced the cover – meant that the negative portrayal spread well beyond the business community.
The New York Magazine cover story, by Joe Hagan, is less incendiary than Taibbi's piece, and more narrowly focused. It zeros in on the fact decision to bail out AIG – made in large part by former Goldmanites Hank Paulson and Lloyd Blankfein – was also a decision to bail out Goldman, which got $13 billion from AIG as a result of the bailout. The AIG bailout came on the heels of the decision to let Lehman Brothers, one of Goldman's former competitors, die.
The infusion of taxpayer money meant that Goldman would be able to stay above water instead of potentially being sunk by its ties to AIG. Now Goldman is reaping record profits -- $5.1 billion so far in 2009 -- as many Americans struggle to get by.
Former New York governor and attorney general Eliot Spitzer is also sounding the anti-Goldman bell. Appearing on MSNBC, Spitzer criticized the Federal Reserve for using the AIG bailout to give "tens of billions of dollars that went right through – conduit payments – to the investment banks that are now solvent."
"[Taxpayers] didn't get stock in those banks, they didn't ask what was going on – this begs and cries out for hard, tough examination," he continued, complaining of "a Ponzi scheme, an inside job."
All this has led to more scrutiny of a company that has long been a mystery to most Americans. Because Goldman operates as both a trading house and "a fee-based adviser to the companies being traded," as New York Magazine puts it, some have begun characterizing the company as a player that has essentially gamed the system – an entity that knows "every hand at the table and using that information to enrich itself at the expense of others."
As a result of all this negative attention, Washington has begun to move away from Goldman, at least in public. Here's New York Magazine's Hagan:
Out of political necessity, all of Washington appears to be turning a cold shoulder toward Goldman. A senior Obama-administration official close to Tim Geithner declares that "Goldman has left the building." Onetime Goldman lobbyist and now Treasury chief of staff Mark Patterson has taken a public beating for his connection to the firm. And John Thornton, a former president at Goldman Sachs, was passed over as ambassador to China because his relationship to the firm "concerned" the Obama administration, says a person familiar with the situation. "It used to be if you were a senior Goldman person and you were considered for a position, you'd have an advantage," this person says. "Now it's clearly a disadvantage."It remains to be seen what effect all this will really have; the Obama administration is still brimming with ex-Goldman staffers and allies of the company, and Hagan writes that Goldman "probably still has the nod and the wink it needs to continue to rake in profits with impunity." But even if the bonuses keep rolling in, Goldman employees seem to have lost much of their reputation as a force for good in the economy – and that's something that can't easily be bought back.