‘Evil, Clever Things’

Goldman Sachs. What can you say about it? A lot!

If you’re David Solomon, you’ll say it’s a “world-class” firm with “exceptional talent, execution capabilities and risk management expertise.”

That quote, from the bank’s Q3 earnings release, isn’t wrong. But the irony is that ol’ D-Sol did more to detract from the storied legacy of the firm than reinforce it. He’s not, in my opinion, an “exceptional talent.” He does have “risk management expertise,” but Goldman’s bungled foray into consumer banking strongly suggests Solomon’s severely lacking in the “execution capabilities” department.

Have you ever listened to Solomon talk? If so, can you see yourself getting duped by D-Sol? Because I can’t. If Solomon were an Eskimo, I’m pretty sure I could sell him a truckload of ice. He’s the type of guy I made a living taking advantage of in my mid- to late-20s. Lloyd Blankfein, on the other hand, is someone who’s probably taken advantage of me somehow, at some point, without my ever having met the man, nor his even knowing I exist.

I’m not in a charitable mood today, so let me ask you something else about Solomon: What kind of 60-year-old white man is a DJ? A simple one — i.e., a simpleton. Do yourself a favor, folks: Age gracefully. Are you 62? Are you white? Then don’t pull a D-Sol. Don’t step behind any turntables. Because you’re not a DJ. You’re an old man. Depressing? Sure. But it happens to everyone not lucky enough to die young.

Goldman’s stodgier higher-ups, partners, former employees-turned Bloomberg Op-Ed writers and also impatient shareholders finally convinced Solomon to throw in the towel on what I’d be inclined to characterize as one of the more inexplicably stupid pitches in the history of the firm: “Goldman Sachs, now welcoming everyday people.”

The bank would never put it this way, but part and parcel of Goldman’s mystique is the cloud of condescension that shrouds it. That, and its reputation for putative iniquity and guileful contrivance. The firm’s employees — current and former — are proud of all that. Seriously. Here’s former Goldmanite Matt Levine to explain:

[I] still have some rooting interest in Goldman’s mystique. Like: If Goldman does awesome brilliant things, then [I] look smarter and more awesome by virtue of [my] association with Goldman. If Goldman does evil clever things, then that’s pretty good too? [E]veryone [I] meet is like ‘oh you must be evil and clever,’ and I will definitely take that.

If you read that when Matt wrote it a year ago next month, you might’ve thought to yourself, “Oh, that’s cute and funny.” What you should’ve thought, though, is “Yeah, f-ck this guy.” Here’s a man — a lawyer, no less — who worked at a firm with a reputation for doing, in his words, “evil clever things,” in many cases at the expense of Main Street, according to critics. And now he’s proud of it? And you, as a subscriber to his (exceedingly popular) Bloomberg Opinion column, are supposed to chuckle because… why? What’s funny here, exactly?

When he says things like that — and that excerpted passage isn’t the only example — he’s not laughing with you. He’s laughing at you. What’s he worth, do you reckon? Matt, I mean. What are you worth? Less than him or more, if you had to guess? And how much of whatever he’s worth is either from Goldman directly or in some way, shape or form related to the social network that goes along with having worked at Goldman? In other words: What share of Matt’s net worth is related, directly or otherwise, to “evil clever things” he’s done or seen done? And what share of said “evil clever things” came at the expense, one way or another, of Main Street, which is to say at your expense? Again: The jokes on you. I swear to you it is.

I bring that up because the linked Levine column was, in part anyway, an excoriating critique of Solomon’s consumer banking misadventure. Here’s how Matt explained it from the perspective of a man who’s proud to be associated with a business model that historically left consumer banking — i.e., banking America’s “poors” — to less-“clever” firms:

Goldman [might have] lost [its] mystique and swagger. Now it is run by a former DJ… [a]nd its big strategic move in recent years has been to expand into consumer banking, which is just less cool than high-stakes mergers and billion-dollar trading. Back in 2021, I wrote sort of wishfully about how, sure, sure, it looked like they were just opening credit cards and savings accounts for retail customers, but maybe it was all an elaborate misdirection. But, no, no trick. They were just doing consumer banking.

Shame on them! Who banks poors? Not Goldman. As Matt correctly noted, banking poors is “less cool” than M&A and getting paid huge sums to move numbers around on a screen. (Not really. “Cool” is being a paramedic. Or a school teacher. Or a barber. Or a firefighter. Or a volunteer at an animal shelter. Or, frankly, anything other than an investment banker or a lawyer. The only thing worse than an investment banker or a lawyer is an investment banker who’s also a lawyer.)

Thankfully, Goldman’s back to doing “cool” things — deals and moving numbers around on screens. Q3 results released on Tuesday showed IB fees of $1.86 billion. That was easily better than the $1.68 billion analysts who work for less “clever” banks expected. Equities trading, meanwhile, brought in $3.5 billion, a cool $500 million more than consensus. FICC trading was weaker. $2.96 billion was merely in-line, but the 12% YoY drop came as no surprise.

The IB breakdown showed a beat in advisory, where fees were $875 million, $120 million ahead of consensus. Equity underwriting revenue of $385 million rose 25% YoY, while debt underwriting jumped an impressive 46% to $605 million. Goldman thanked advisory — which missed last quarter, you might recall — for an increase in the firm’s IB backlog.

All told, revenue in Global Banking & Markets — Levine’s “high-stakes mergers and billion-dollar trading” — was $8.55 billion, nearly a billion ahead of estimates.

By contrast, Goldman’s “Platform Solutions” segment — basically the silo for Solomon’s consumer nightmare — posted a pre-tax loss of $559 million, far wider than analysts expected. Revenue there plunged by a third.

I could take you line-by-line through Goldman’s Q3 earnings. But there’d be no point. The juxtaposition between Global Banking & Markets and Platform Solutions says it all. Main Street’s for losers. Wall Street’s for winners. Solomon forgot about that somewhere along the way — maybe while scratchin’ and mixin’ at a rave — but he seems to have remembered what makes Goldman Goldman.

On the firm’s revamped investor relations page, right below the links to Q3’s earnings materials, there’s a section called “Why Invest in Goldman Sachs.” The firm’s strategic anchor, a one-sentence elevator pitch explains, is the bank’s “world-class, interconnected Global Banking & Markets and Asset & Wealth Management franchises.”

So, “high-stakes mergers and billion-dollar trading.” And also the management of wealth. “God’s work,” as Blankfein (in)famously put it. Or, if you prefer Levine’s description, “evil clever things.”