7 ms·

Lawrence Lessig: What's really wrong with Goldman Sachs

151 points by shawnee_ 15y ago

milkshakes 15y ago
Moral fiber is no doubt important. So, too, is culture. But it is a mistake to understand culture without also understanding incentives. The culture that Smith praises was the product of a firm with a particular legal form, in a particular financial environment. At just about the same time, both particularities changed. And given these changes, it is no wonder that the culture Mr. Smith celebrates soon disappeared.
twoodfin 15y ago
This is a fairly content-less piece. As near as he comes to naming a specific problem or proposing a specific solution is this quote: > Robert Reich, for example, has long argued that "professional companies should not be permitted to become publicly held corporations." As he puts it, "Such a step puts them into high-stakes competition for investors, pushing them to maximize profits over their responsibilities to the public." And even that's pretty hand-wavy. What makes a "professional company" and why would such a thing have a "responsibility to the public" above and beyond any other company? Goldman may be a bogeyman to a lot of folks, but at least they had the sense to get out of the crazy CDO world as fast as they could. If you're going to spend pages explaining how "toxic" the environment is there, some specific, verifiable examples would be nice. Neither Smith nor Lessig provide any. Goldman's clients aren't morons, and if they thought they could do better elsewhere, they were and are free to stop doing business with GS. Until you can really nail Goldman with black and white evidence of fraud, it's hard to take these generalized allegations seriously.
- JoelSutherland 15y ago
  Assuming this comment is a response to what the article said, your reasoning is circular. Lessig blames both the change in laws/regulations and Goldman going public for the issues. We can't nail Goldman with fraud under the existing laws. That's his point: laws and regulations should be reverted/changed to criminalize some of their current behavior. Professional Companies are companies that provide professional services. These are companies that are hired because they are licensed to do something. They need to be licensed because their field is sufficiently complex or opaque that their clients cannot evaluate their competence or trustworthiness. He suggests these company should not be able to go public because this class of companies cannot be fairly evaluated by the market without creating perverse incentives.
  - twoodfin 15y ago
    I'm sorry, Lessig didn't name a single repealed regulation in his piece, nor how maintaining such a regulation would have concretely affected some action that Goldman took. As I said, it's hand-waving.
    - Hubbert 15y ago
      Aside from the rule against incorporating, the Glass-Steagall Act was very helpful in preventing the Too Big To Fail bailouts for many decades. While the author may have omitted some specifics (in part due to column length), to those who follow the industry even casually, it's hard not to consider the changes self-evident, like a statement "CPUs are more powerful today than in 1990". Even if the regulations were unchanged, top levels of government are almost 100% Goldman alumni and/or future Goldman people, so enforcement is comical. Imagine if Ford and GM executives had been running the EPA for the last 20 years.
  - anamax 15y ago
    > These are companies that are hired because they are licensed to do something. What fraction of GS biz actually involves licensed activities? Yes, stock brokers are licensed, but bankers aren't. Most types of financial advisors aren't licensed. Are any traders licensed?
    - hncommenter13 15y ago
      This is not quite correct. Senior bankers (and certainly senior institutional salespeople, of which Greg Smith was one) are typically required by their firms to be licensed by FINRA. Certainly not all investment bankers or traders are required to be licensed (and I don't think they should be), but a significant fraction are. Also, fwiw, mortgage brokers and lawyers are required to be licensed in almost every state. Licensing--or lack thereof--has little to do with ethical behavior.
      - Drbble 15y ago
        Licensing almost always includes a legal commitment to specific ethical behaviors, fiduciary duty and the like. That is one of the main differences between licensed professionals and flea market vendors. Doctors, lawyers, and engineers all make specific ethical commitments in order to win authorization to practice.
- toufka 15y ago
  I believe you are missing the point. It is not about who provides a better service, or fraud. It is about long-term stability. Goldman has made extraordinary profits. And done well for their customers. But it is becoming increasingly clear that the outlook is becoming more and more myopic. Profit ≠ Profit, if one is short-term and one is long-term. They are different beasts. Goldman used to be the king of kings with respect to earning long-term profit. Mr. Smith points out that long-term profit has been sidelined for short-term profit. Both are still profit - but one has a sustainable culture, one does not. This is a more nuanced issue than 'good company', 'bad company' - the qualification, 'in the moral way' becomes necessary.
- 286c8cb04bda 15y ago
  > And even that's pretty hand-wavy. What makes a "professional company" and why would such a thing have a "responsibility to the public" above and beyond any other company? I suspect he's using the word "professional" here in the more traditional form. He's roughly referring to careers like doctor, lawyer, banker, where there is usually formal licensing based on public interest. That's e.g. why there is a lot more paperwork to file when you start a hospital or a bank than a widget shop.
- huherto 15y ago
  I may be wrong but I interpreted a "professional company" as a "professional services company" Companies where the main value offered is the services of the partners of the firm. As far as I knew, these companies were not public because they reserve stock for the professionals working in the firm.
- m0th87 15y ago
  "The Big Short" provides a great deal of context to the behavior of financial services firms, and Lessig's arguments seem to completely align. The problem with financial services companies being public is that the investors aren't leveraging their own money when they make risky bets. If a bet goes sour, the stockholders are ultimately responsible for absorbing the loss. Goldman and its ilk are scrutinized for good reason. It's strange that you should compliment them for exiting the CDO market. Shouldn't they instead be condemned for entering it in the first place? What about the SEC investigation into Goldman knowingly selling junk securities to customers [1]? The fact that they were only fined $550m suggests that - as Lessig argues - we are under-regulated. This shouldn't be allowed to happen in the first place. 1: http://www.sec.gov/news/press/2010/2010-123.htm http://www.sec.gov/news/press/2010/2010-123.htm
  - Drbble 15y ago
    The problem you describe infects all public corporations, not just in the finance industry. It is why management of big public companies tend to pillage, not produce.
- ScottBurson 15y ago
  A professional corporation is a specific type of corporation. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations. Professional corporations [...] do not usually afford [...] the same degree of limitation of liability as ordinary business corporations. For more info: http://en.wikipedia.org/wiki/Professional_corporation http://en.wikipedia.org/wiki/Professional_corporation
yaix 15y ago
A specific culture is not only the "Secret Sauce" of Goldman Sachs, but of our Western society at large, especially of the Northern European society (and its derivatives, all those formed by the ideas of the Enlightenment and with our Generalized Reciprocity, as R. Putnam [Book: "Bowling Alone"] calls it). Our current economic system, starting in the late senventies, is rapidly destroying that very basis of our societies' Secret Sauce. Sucks.
- redcircle 15y ago
  Paul Goodman published "Growing Up Absurd" in 1960. I wonder how much of our secret sauce is based on people trying to escape the absurdity of their environments --- would we have a Silicon Valley if people felt comfortable and happy remaining in their childhood communities?
snowwrestler 15y ago
Lessig does not make the case for why Goldman, in particular, was so harmed by the act of going public. The incentives he cites exist for all public companies, and many public companies have existed, and done good work, for decades. Speaking of which, before we talk about the incentives that led to Goldman's cultural decline, how about some objective confirmation that their culture has in fact declined? The article is in response to a single executive's published opinion.
- Lazare 15y ago
  This doesn't directly answer your question, but it's related: http://news.ycombinator.com/item?id=3711278 http://news.ycombinator.com/item?id=3711278
eternalban 15y ago
While I am /in no way/ a fan of GS (or the entire sector), I find the sudden blitz on GS to be quite smelly. First NYTimes publishes a relatively random VP's resignation slam-bye. Matt T. from Rollingstones was also cheerleading. And of course, NYTimes had a front page story followup. And now, this. What is going on? Have they found their scapegoat for the generally sociopathic (and well hated) sector?
- roc 15y ago
  What 'blitz'? There was one bridge-burning editorial by an outgoing VP. Then you have Taibbi doing what he's done day-in, day-out for quite some time now. And after that is just the 24-hour news groups doing what they do, which is latching onto and flogging the stories of the day that are generating interest. And when you mix Rage-At-Wall-Street with what amounts to a Gossip column, the reader response is pretty predictable.
  - tptacek 15y ago
    GS has thousands and thousands of VPs, many with as few as one direct report. This particular former VP apparently had zero direct reports. Part of what makes this story smelly is the prominence being given to this one voice; very little of the reporting on the story puts his title (normally a fairly senior one) into perspective. According to the Dealbook post mentioned downthread, almost 1/3rd of all of Goldman's employees have the same title this person does.
    - deleted 15y ago
      [deleted]
      - deleted 15y ago
        [deleted]
    - roc 15y ago
      And I'm pretty sure that if any of those other VPs were willing to pen a bridge-burning gossip piece, plenty of editors would be competing to give them space. Similarly, the tilt in coverage can't be a new concept for anyone here. We've known for quite some time that you can more-reliably predict news coverage based on the outlet's target market than based on the facts. The idea that some news agencies are playing this up and others are playing it down can't possibly be a surprise.
qdog 15y ago
This is one of the few things I've read on CNN in a long time I like. Lessig doesn't go into details about regulations, but I would think most people are familiar with the repeal of Glass-Steagal and the de-regulation that began under Reagan in the 80's. GS has a conflict of interest, because it trades on both ends. It sells products to a client, but is often on the opposing side of those trades. That's why GS is so profitable, at least in the short term. The funny thing is all the people trying to defend GS, as though having undisclosed interest in the deals they do with clients is just fine. Looking back on the wreckage, bank bailouts and other things that have nearly brought the economy to a halt the last few years, I don't really understand how average people who don't have a vested interest in wall street banking can support any of those firms.
- simplefish 15y ago
  Actually, no, most people are NOT familiar with the repeal of Glass-Steagall (not Glass-Steagal, incidentally). Including you; if you were you'd realize that there's no coherent argument for how the so-called "repeal" of Glass-Steagall[1] actually led to the financial crisis or to increased profits for GS. Lessig didn't name an actual regulation that might have caused this, and neither have you. There's a reason. Further, you fundamentally misunderstand how markets work, what GS is doing in these cases, and even what a conflict of interest is. What GS is doing is called "being a broker"[2]. If you don't understand what a broker is, then you may not be well placed to pontificate on financial markets. [1]: Everyone and their dog likes to trot out the "repeal of Glass-Steagall" and feel clever. If pressed, a few of them will even stammer out something about it being a law that seperated investment and commercial banking. In actuality, the main function of Glass-Steagall was setting up the FDIC, and it's never been repealed. It did contain a lot of other rule changes and regulations, most of which have been repealed decades ago - and good riddance. Do you think it should be illegal to offer interest on a checking account? No? Great, you too are a supporter of the "repeal" of Glass-Steagall. As for the restriction on retail and investment banking...god only knows how that's supposed to have prevented any problems. Not only did it not do what it claimed to do (Citibank merged with Saloman Smith Barney while the rules were nominally still in effect), nobody can explain how the rules intention would have done anything worthwhile. None of the competing theories of "what went wrong" and "how to stop it" have anything to do with seperating commercial and investment banking (and none of the large merged banks failed while several large banks with only commercial or only investment banking operations did fail). So... [2]: Of course, maybe you want to argue that being a broker is illegal? Or should be illegal? Pull the other one, it's got bells on.
Shane_Wolf 15y ago
It is a world of buy and selling securities. There is always someone else on the other end. GS was one of the first to realize that the subprime mortgage market was about to blow up. To cover their asses they began selling everything they owned and at the same time bought CDS's. So if a German bank that GS does business with still thinks its a good idea to buy some CDO packaged with "AAA" bonds without doing their diligence then GS should have every right to sell them some CDO's, and also short those same securities. They realized there was a problem before everyone else, and they exploited those people to profit from them. Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value.
- nitrogen 15y ago
  Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value. I don't know about other startups, but speaking for myself, I don't consider the hoarding of information a virtue. I use capabilities that others don't have to create value. Taking advantage of information asymmetry is, IMO, exploitative rather than creative.
  - Shane_Wolf 15y ago
    I can agree with that.
ANH 15y ago
The most recent Econ Talk (http://www.econtalk.org/ http://www.econtalk.org/) is an interview with a former Goldman quant who said that Goldman's culture changed "markedly" for the worse when it went public. Before that, Goldman's partners had a huge incentive to make sure "psychopaths" weren't handling the money, and access to capital was quite limited. Capitalization was a constant problem, and they fought for it. After going public, that problem went away, and so did the fear of the psychopaths.
- pradocchia 15y ago
  permalink: http://www.econtalk.org/archives/2012/03/derman_on_theor.html http://www.econtalk.org/archives/2012/03/derman_on_theor.htm...
b2spirit 15y ago
Sachs pronounced sucks.
signalsignal 15y ago
This is wonderful article written by a Harvard Law professor. Normally I don't agree with lawyers, but in this case Lawrence Lessig just tells it like it is without manipulating the facts in a well-respected journal.

151 points by shawnee_ 15y ago

Moral fiber is no doubt important. So, too, is culture. But it is a mistake to understand culture without also understanding incentives. The culture that Smith praises was the product of a firm with a particular legal form, in a particular financial environment. At just about the same time, both particularities changed. And given these changes, it is no wonder that the culture Mr. Smith celebrates soon disappeared.

twoodfin 15y ago

This is a fairly content-less piece. As near as he comes to naming a specific problem or proposing a specific solution is this quote: > Robert Reich, for example, has long argued that "professional companies should not be permitted to become publicly held corporations." As he puts it, "Such a step puts them into high-stakes competition for investors, pushing them to maximize profits over their responsibilities to the public." And even that's pretty hand-wavy. What makes a "professional company" and why would such a thing have a "responsibility to the public" above and beyond any other company? Goldman may be a bogeyman to a lot of folks, but at least they had the sense to get out of the crazy CDO world as fast as they could. If you're going to spend pages explaining how "toxic" the environment is there, some specific, verifiable examples would be nice. Neither Smith nor Lessig provide any. Goldman's clients aren't morons, and if they thought they could do better elsewhere, they were and are free to stop doing business with GS. Until you can really nail Goldman with black and white evidence of fraud, it's hard to take these generalized allegations seriously.

JoelSutherland 15y ago
Assuming this comment is a response to what the article said, your reasoning is circular. Lessig blames both the change in laws/regulations and Goldman going public for the issues. We can't nail Goldman with fraud under the existing laws. That's his point: laws and regulations should be reverted/changed to criminalize some of their current behavior. Professional Companies are companies that provide professional services. These are companies that are hired because they are licensed to do something. They need to be licensed because their field is sufficiently complex or opaque that their clients cannot evaluate their competence or trustworthiness. He suggests these company should not be able to go public because this class of companies cannot be fairly evaluated by the market without creating perverse incentives.
- twoodfin 15y ago
  I'm sorry, Lessig didn't name a single repealed regulation in his piece, nor how maintaining such a regulation would have concretely affected some action that Goldman took. As I said, it's hand-waving.
  - Hubbert 15y ago
    Aside from the rule against incorporating, the Glass-Steagall Act was very helpful in preventing the Too Big To Fail bailouts for many decades. While the author may have omitted some specifics (in part due to column length), to those who follow the industry even casually, it's hard not to consider the changes self-evident, like a statement "CPUs are more powerful today than in 1990". Even if the regulations were unchanged, top levels of government are almost 100% Goldman alumni and/or future Goldman people, so enforcement is comical. Imagine if Ford and GM executives had been running the EPA for the last 20 years.
- anamax 15y ago
  > These are companies that are hired because they are licensed to do something. What fraction of GS biz actually involves licensed activities? Yes, stock brokers are licensed, but bankers aren't. Most types of financial advisors aren't licensed. Are any traders licensed?
  - hncommenter13 15y ago
    This is not quite correct. Senior bankers (and certainly senior institutional salespeople, of which Greg Smith was one) are typically required by their firms to be licensed by FINRA. Certainly not all investment bankers or traders are required to be licensed (and I don't think they should be), but a significant fraction are. Also, fwiw, mortgage brokers and lawyers are required to be licensed in almost every state. Licensing--or lack thereof--has little to do with ethical behavior.
    - Drbble 15y ago
      Licensing almost always includes a legal commitment to specific ethical behaviors, fiduciary duty and the like. That is one of the main differences between licensed professionals and flea market vendors. Doctors, lawyers, and engineers all make specific ethical commitments in order to win authorization to practice.
toufka 15y ago
I believe you are missing the point. It is not about who provides a better service, or fraud. It is about long-term stability. Goldman has made extraordinary profits. And done well for their customers. But it is becoming increasingly clear that the outlook is becoming more and more myopic. Profit ≠ Profit, if one is short-term and one is long-term. They are different beasts. Goldman used to be the king of kings with respect to earning long-term profit. Mr. Smith points out that long-term profit has been sidelined for short-term profit. Both are still profit - but one has a sustainable culture, one does not. This is a more nuanced issue than 'good company', 'bad company' - the qualification, 'in the moral way' becomes necessary.
286c8cb04bda 15y ago
> And even that's pretty hand-wavy. What makes a "professional company" and why would such a thing have a "responsibility to the public" above and beyond any other company? I suspect he's using the word "professional" here in the more traditional form. He's roughly referring to careers like doctor, lawyer, banker, where there is usually formal licensing based on public interest. That's e.g. why there is a lot more paperwork to file when you start a hospital or a bank than a widget shop.
huherto 15y ago
I may be wrong but I interpreted a "professional company" as a "professional services company" Companies where the main value offered is the services of the partners of the firm. As far as I knew, these companies were not public because they reserve stock for the professionals working in the firm.
m0th87 15y ago
"The Big Short" provides a great deal of context to the behavior of financial services firms, and Lessig's arguments seem to completely align. The problem with financial services companies being public is that the investors aren't leveraging their own money when they make risky bets. If a bet goes sour, the stockholders are ultimately responsible for absorbing the loss. Goldman and its ilk are scrutinized for good reason. It's strange that you should compliment them for exiting the CDO market. Shouldn't they instead be condemned for entering it in the first place? What about the SEC investigation into Goldman knowingly selling junk securities to customers [1]? The fact that they were only fined $550m suggests that - as Lessig argues - we are under-regulated. This shouldn't be allowed to happen in the first place. 1: http://www.sec.gov/news/press/2010/2010-123.htm http://www.sec.gov/news/press/2010/2010-123.htm
- Drbble 15y ago
  The problem you describe infects all public corporations, not just in the finance industry. It is why management of big public companies tend to pillage, not produce.
ScottBurson 15y ago
A professional corporation is a specific type of corporation. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations. Professional corporations [...] do not usually afford [...] the same degree of limitation of liability as ordinary business corporations. For more info: http://en.wikipedia.org/wiki/Professional_corporation http://en.wikipedia.org/wiki/Professional_corporation

yaix 15y ago

A specific culture is not only the "Secret Sauce" of Goldman Sachs, but of our Western society at large, especially of the Northern European society (and its derivatives, all those formed by the ideas of the Enlightenment and with our Generalized Reciprocity, as R. Putnam [Book: "Bowling Alone"] calls it). Our current economic system, starting in the late senventies, is rapidly destroying that very basis of our societies' Secret Sauce. Sucks.

redcircle 15y ago
Paul Goodman published "Growing Up Absurd" in 1960. I wonder how much of our secret sauce is based on people trying to escape the absurdity of their environments --- would we have a Silicon Valley if people felt comfortable and happy remaining in their childhood communities?

snowwrestler 15y ago

Lessig does not make the case for why Goldman, in particular, was so harmed by the act of going public. The incentives he cites exist for all public companies, and many public companies have existed, and done good work, for decades. Speaking of which, before we talk about the incentives that led to Goldman's cultural decline, how about some objective confirmation that their culture has in fact declined? The article is in response to a single executive's published opinion.

Lazare 15y ago
This doesn't directly answer your question, but it's related: http://news.ycombinator.com/item?id=3711278 http://news.ycombinator.com/item?id=3711278

eternalban 15y ago

While I am /in no way/ a fan of GS (or the entire sector), I find the sudden blitz on GS to be quite smelly. First NYTimes publishes a relatively random VP's resignation slam-bye. Matt T. from Rollingstones was also cheerleading. And of course, NYTimes had a front page story followup. And now, this. What is going on? Have they found their scapegoat for the generally sociopathic (and well hated) sector?

roc 15y ago
What 'blitz'? There was one bridge-burning editorial by an outgoing VP. Then you have Taibbi doing what he's done day-in, day-out for quite some time now. And after that is just the 24-hour news groups doing what they do, which is latching onto and flogging the stories of the day that are generating interest. And when you mix Rage-At-Wall-Street with what amounts to a Gossip column, the reader response is pretty predictable.
- tptacek 15y ago
  GS has thousands and thousands of VPs, many with as few as one direct report. This particular former VP apparently had zero direct reports. Part of what makes this story smelly is the prominence being given to this one voice; very little of the reporting on the story puts his title (normally a fairly senior one) into perspective. According to the Dealbook post mentioned downthread, almost 1/3rd of all of Goldman's employees have the same title this person does.
  - deleted 15y ago
    [deleted]
    - deleted 15y ago
      [deleted]
  - roc 15y ago
    And I'm pretty sure that if any of those other VPs were willing to pen a bridge-burning gossip piece, plenty of editors would be competing to give them space. Similarly, the tilt in coverage can't be a new concept for anyone here. We've known for quite some time that you can more-reliably predict news coverage based on the outlet's target market than based on the facts. The idea that some news agencies are playing this up and others are playing it down can't possibly be a surprise.

qdog 15y ago

This is one of the few things I've read on CNN in a long time I like. Lessig doesn't go into details about regulations, but I would think most people are familiar with the repeal of Glass-Steagal and the de-regulation that began under Reagan in the 80's. GS has a conflict of interest, because it trades on both ends. It sells products to a client, but is often on the opposing side of those trades. That's why GS is so profitable, at least in the short term. The funny thing is all the people trying to defend GS, as though having undisclosed interest in the deals they do with clients is just fine. Looking back on the wreckage, bank bailouts and other things that have nearly brought the economy to a halt the last few years, I don't really understand how average people who don't have a vested interest in wall street banking can support any of those firms.

simplefish 15y ago
Actually, no, most people are NOT familiar with the repeal of Glass-Steagall (not Glass-Steagal, incidentally). Including you; if you were you'd realize that there's no coherent argument for how the so-called "repeal" of Glass-Steagall[1] actually led to the financial crisis or to increased profits for GS. Lessig didn't name an actual regulation that might have caused this, and neither have you. There's a reason. Further, you fundamentally misunderstand how markets work, what GS is doing in these cases, and even what a conflict of interest is. What GS is doing is called "being a broker"[2]. If you don't understand what a broker is, then you may not be well placed to pontificate on financial markets. [1]: Everyone and their dog likes to trot out the "repeal of Glass-Steagall" and feel clever. If pressed, a few of them will even stammer out something about it being a law that seperated investment and commercial banking. In actuality, the main function of Glass-Steagall was setting up the FDIC, and it's never been repealed. It did contain a lot of other rule changes and regulations, most of which have been repealed decades ago - and good riddance. Do you think it should be illegal to offer interest on a checking account? No? Great, you too are a supporter of the "repeal" of Glass-Steagall. As for the restriction on retail and investment banking...god only knows how that's supposed to have prevented any problems. Not only did it not do what it claimed to do (Citibank merged with Saloman Smith Barney while the rules were nominally still in effect), nobody can explain how the rules intention would have done anything worthwhile. None of the competing theories of "what went wrong" and "how to stop it" have anything to do with seperating commercial and investment banking (and none of the large merged banks failed while several large banks with only commercial or only investment banking operations did fail). So... [2]: Of course, maybe you want to argue that being a broker is illegal? Or should be illegal? Pull the other one, it's got bells on.

Shane_Wolf 15y ago

It is a world of buy and selling securities. There is always someone else on the other end. GS was one of the first to realize that the subprime mortgage market was about to blow up. To cover their asses they began selling everything they owned and at the same time bought CDS's. So if a German bank that GS does business with still thinks its a good idea to buy some CDO packaged with "AAA" bonds without doing their diligence then GS should have every right to sell them some CDO's, and also short those same securities. They realized there was a problem before everyone else, and they exploited those people to profit from them. Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value.

nitrogen 15y ago
Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value. I don't know about other startups, but speaking for myself, I don't consider the hoarding of information a virtue. I use capabilities that others don't have to create value. Taking advantage of information asymmetry is, IMO, exploitative rather than creative.
- Shane_Wolf 15y ago
  I can agree with that.

ANH 15y ago

The most recent Econ Talk (http://www.econtalk.org/ http://www.econtalk.org/) is an interview with a former Goldman quant who said that Goldman's culture changed "markedly" for the worse when it went public. Before that, Goldman's partners had a huge incentive to make sure "psychopaths" weren't handling the money, and access to capital was quite limited. Capitalization was a constant problem, and they fought for it. After going public, that problem went away, and so did the fear of the psychopaths.

pradocchia 15y ago
permalink: http://www.econtalk.org/archives/2012/03/derman_on_theor.html http://www.econtalk.org/archives/2012/03/derman_on_theor.htm...

b2spirit 15y ago

Sachs pronounced sucks.

signalsignal 15y ago

This is wonderful article written by a Harvard Law professor. Normally I don't agree with lawyers, but in this case Lawrence Lessig just tells it like it is without manipulating the facts in a well-respected journal.