Bonfire of the Knuckleheads

In Chinatown, when the scrupulously noirish but secretly idealistic Jake Gittes asks Noah Cross, the megalomaniacal water czar, to explain his wicked pursuit of infinite wealth, he frames the question this way: “Why are you doing it? How much better can you eat? What could you buy that you can’t already afford?”

These are questions that come to mind when the subject of Goldman Sachs arises. Here is a Goldman answer to the second question: At Megu, the luxe sushi restaurant in Tribeca that is five minutes away by Porsche 911 from Goldman headquarters, dinner can easily exceed $200 a person. Goldman’s profits in the first quarter of this year came to $3.5 billion. That could buy 159 million servings of Megu’s yellowtail carpaccio. It’s a lot to eat, but appetites at Goldman are boundless and it is doubtful that self-awareness will curb them more than temporarily. It also seems doubtful that the Securities and Exchange Commission, which may investigate whether Goldman bet against its own clients in the subprime-mortgage meltdown, will staple Goldman’s stomach in more than a semipermanent fashion. And President Obama’s financial-reform package is a half measure, one that will allow punishment on the margins, but one that also accepts as ineluctable fact the idea that the system extolled, refined, and gamed by Goldman Sachs and the banks that have yearned to be Goldman, is the best system we can have. This is the system that produced the Goldman executive “Fabulous” Fabrice Tourre, who wrote the most emblematic e mail of the financial crisis:

More and more leverage in the system, The whole building is about to collapse anytime now . . . Only potential survivor, the fabulous Fab . . . standing in the middle of these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!

This is not to say that nothing has shifted in the way we understand Goldman. The firm once supplied the federal government with dollar-a-year men, the titans of finance who, as a favor to world capitalism, went to Washington. Now, though, after the disastrous appearance of Goldman CEO Lloyd Blankfein and various Goldman dwarves—including and especially the not-so-fabulous Tourre—before a Senate committee in late April, it seems likely that Goldman’s name on a résumé will be seen, at least temporarily, as a black mark. Not so long ago, the leaders of Goldman Sachs were seen as greedy but brilliant. Today, they are seen as greedy and quite possibly incompetent. Goldman will survive; Blankfein will stay rich, and the system that produced such “monstruosities” as Tourre will remain, in most ways, the same. But the story line has changed: Bonfire of the Vanities, meet Bonfire of the Knuckleheads.