We should start with the transaction mentioned above, which involved a mortgage-related security called Abacus 2007-AC1. This was one of many collateralized debt obligations that Goldman created, sold to investors, and bet against in the years before the crash, making lots of money when the underlying assets lost value. Other banks did basically the same thing, spreading the rot throughout the financial system as institutional investors such as pension funds and insurance companies bought CDOs based on bad debt.
This seems like pretty objectionable behavior, but as we've seen, Blankfein himself professed to find it OK in principle. What's not OK, one imagines, is for a pink-slipped Goldmanite who worked on the Abacus 2007-AC1 deal to write a roman à clef called "How I Caused the Credit Crunch: An Insider's Story of the Financial Meltdown." But that's what Tetsuya Ishikawa did in 2009. I'm not sure, though, how the company can protect against this contingency, since a laid-off employee has no bonus to lose. On the other hand ...
Which literally makes a mockery of the standard defense of investment banking's social value.
"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!"
When Greg Smith quit Goldman in March 2012 after almost 12 years there, he went out with a bang, calling the place "toxic and destructive" in the pages of The New York Times. But the best revelation in his insider account was the assertion that he had "seen five different managing directors refer to their own clients as 'muppets,' sometimes over internal e-mail." There was also something about "ripping eyeballs out," which seems like a grotesque intensification of "rip-off." So not identifying your clients with absurdist puppets, or fantasizing about blinding them when they make you money, is probably now a prerequisite for a good payday at Goldman. Assuming all this stuff about business standards is real and not a PR ploy.