How Goldman Sachs Came to Rule the World

In 2009, William D. Cohan wrote one of the financial crisis’s most memorable tomes, House of Cards, about the swift collapse of Bear Stearns. With Money and Power, he’s found his way to the other side of the spectrum. And on that end, there’s no shortage of Goldman clients, rivals, and former employees willing to explain how greed and recklessness—the same qualities that doomed Bear’s balance sheet—led Goldman to become too big, too powerful, and even too conflicted to fail.

Given Goldman’s bare-knuckled attitude, Cohan depends on a wide range of unnamed sources. Judiciously relying on their insights, he has produced the frankest, most detailed, most human assessment of the bank to date. Yet the firm winds up looking in many ways like nothing more than a slightly brighter, slightly less foulmouthed version of Bear; it’s just as greedy, just as arrogant, and just as prone to mistakes. Though Cohan acknowledges the firm’s extraordinary ability to recruit and indoctrinate the best and brightest, what seems to truly set Goldman apart is its ability to be a half step quicker than its rivals in correcting itself.

Money and Power suggests the bank does possess a few special powers, starting with its remarkable ability to convince some of the world’s smartest young people that touting stocks, sniffing out arbitrage opportunities, and shaking down corporate clients amount to a noble calling.Goldman realized sooner than its Wall Street peers did that the nation’s love affair with real estate was over. Cohan describes how the company nimbly dumped its mortgage-backed securities on its own clients. This created a big short position against the housing market, allowing it to reap enormous profits while the Bears of the world failed. Was this a sign of Goldman’s superior intelligence, or simply its willingness to knife anybody for a dollar? Both, it seems. Cohan portrays a firm that has grown so large and hungry that it’s no longer long-term greedy but short-term vicious. And that’s the wonder—and the horror—of Goldman Sachs.