Here's the latest from our Highly Placed Professional.
'I don't care if you sell this deal to your dying granny! Just rip out the tubes and tell her they're only going back in when she signs for 5 mil!'. There was a chuckle of manly laughter as our syndicate manager pushed a tricky deal to the assembled sales force. I was an international bond guy back then, so why I was corralled into a HealthSouth deal I'll never know, but it sure was an eye opener. His last words as we shuffled out of the room were: 'And don't forget the 3 points sales credits!"
I use this story to illustrate one inconvenient truth that didn't come out of those Senate hearings Tuesday - no-one mentioned the extraordinary pressure there is on well-heeled Masters of the Universe to push so-called 'shitty deals', especially given that at least 2 or 3 % in sales commissions will towards your year-end pot. That's serious money for each sale. Moreover, no-one except a bond salesman (or woman) can ever understand the pure thrill of landing a big order on something that is tricky and causing the firm grief, setting off waves of emails and meetings and sleepless nights.
And that's the part of this whole hearing session that everyone was just too politic to talk about. If Daniel Sparks, the former head of mortgages at Goldman, really did place the 300 mil single A rated tranche of Timberwolf with his clients, he would've been a God in Goldman's eyes. THAT 's the sweet smell of success that motivates these people, and why everyone conveniently forgets that a lot of people can lose an awful lot of money when it all goes wrong.
Sparks came across at the hearing as tanned, fit, neatly hair cut, dapper suited - and pretty defensive. His attempts to answer simple questions like 'Would you put your clients first ?' were more puerile than pre-graders in Kindergarten. These guys just didn't want to answer the questions and in their refusal to do so, you got to see their essential arrogance. That arrogance is born of annual pay checks in the many millions, huge investment portfolios, and the secret knowledge that they have been at the centre of the biggest trading nerve centre on the planet. .
But what about Fabrice 'Fab' Tourre, the cocky, over-educated and under moralised 30-something Frenchman, with great English and a horrible tie ? I could detect that he'd indeed had a few sleepless nights and was worried, as he frequently looked around for reassuring support from his legal team. His prepared testimony, of course, was written by skilled attorneys and was certainly not his own words. He was out of his depth on the legal and moral side of this equation, and he wasn't as sure of himself as he'd been in those arrogant and revealing emails. How the committee were not able to pin something on him and get him to admit to at least a modicum of wrongdoing, I will never know.
In general, the Goldman lot came over as very young and very smart. But they also appeared very greedy, in denial, and extremely evasive. Then Goldie CEO Lloyd Blankfein was served up as a nice after-dinner mint, tacitly admitting that the firm might just need to have a wee rethink about how it pursues its future objectives. His comments, however, were clouded by the use of terms such as 'complexity' and 'sophistication'. You might substitute 'breathtaking greed' and 'arrogance'. These guys were good at dodging bullets, but Goldman's dirty laundry was hung out for all to see'.