How Greed Changed Goldman

The Culture of Success
By Lisa Endlich
Knopf 319pp $27.50

Pity poor Lisa Endlich. The former trader has written a book, Goldman Sachs: The Culture of Success, about her former employer. But just look at her raw material: Instead of the bunch of funny, outrageous traders who populated Michael Lewis' Liar's Poker, she must breathe life into scores of colorless Goldman, Sachs & Co. partners who are selected precisely because they are interchangeable. Nor does Endlich have a compact, dramatic tale to offer, such as that of the high-stakes bidding war for RJR Nabisco Inc. recounted by Bryan Burrough's Barbarians at the Gate. Instead, she slogs chronologically through the 130 years since Goldman Sachs's founding in 1869.

The prestigious investment bank, most writers would agree, is simply not good copy. But the book has one big thing going for it: Lots of intelligent and otherwise sensible people are deeply fascinated by Goldman Sachs. Why? Because its top partners are filthy rich. People are mesmerized by the idea of a small group of people so awash in lucre. A few years back, Britain's The Guardian summed up the situation: ''What's the difference between Tanzania and Goldman Sachs? One is an African country that makes $2.2 billion a year and shares it among 25 million people. The other is an investment bank that makes $2.6 billion and shares most of it between 161 people.''

Alas, Endlich's pen is far less wicked. She is at best a workmanlike writer, prone to burying big events in mid-paragraph. Nor does she really delve into how Goldman acquires, spends, and divvies up its vast collective wealth.

And Endlich is timid when it comes to drawing conclusions. One example: Was Goldman guilty of charges that it helped media mogul Robert Maxwell cheat Maxwell pensioners? Says Endlich: ''Maxwell used Goldman Sachs to steal money'' from Maxwell company pension plans by hiring the firm to broker a trade between various Maxwell-controlled entities. But as to Goldman's culpability, she says only that it should have investigated Maxwell better. Perhaps there is a compelling book to be coaxed from Goldman Sachs's rich history, but I found this one frustrating and largely unsatisfying.

Still, for the patient reader, Goldman Sachs has several redeeming qualities. Endlich gained the best access ever to some of the most press-shy executives in the world, and she has gleaned some fresh details, quotes, and insights. She has written the best description yet of the dramatic events of 1994, when Goldman hit a nadir because of huge trading losses and personnel defections. Her access also yielded a few flashes of color. One wishes there were more sentences such as this: ''The three partners and the extremely overweight [Robert] Maxwell rode upstairs in a tiny elevator designed for two normal-sized adults.''

Another strong suit is Endlich's experience as a Goldman Sachs trader. She paints a clear picture of the buildup and ultimate downfall of Goldman's mid-1990s proprietary-trading operation in London, complete with such traders' colloquialisms as ''be big and be real'' (translation: big trading profits justify taking big risks). She also describes the unique Goldman culture and how it is evaporating. ''In the old days, when you became a partner, you would feel free to give your wallet to another partner to hold for safekeeping. I do not think it is that way today,'' says one partner.

But except for a few killer quotes, Endlich never confronts head-on this dark side of Goldman's vaunted culture--greed--even though it comes up again and again. For example, Endlich implies that the firm's 1994 woes were a result of avarice, quoting one former partner: ''Greed changed the firm, and the view was to take as much risk as we can, and make it as fast as we can.''

In Endlich's defense, she is the victim of bad timing. She is unable to end with the firm's now imminent initial public offering because it was postponed in September, 1998. And just after this book went to press, Goldman was rocked by news that Chief Executive Jon Corzine was being ousted as CEO. There's no mention of this development in the book, but one observation is prescient. When Corzine was promoted in 1994, the firm was hemorrhaging $200 million a month in losses in proprietary trading, which Corzine oversaw. Notes the author: ''Some banking partners felt that rather than be elevated, Corzine should have been made to bear some of the responsibility for the firm's troubles, many of which originated in his division.'' Apparently, those bankers got their way in January, 1999, when Corzine was dethroned in a palace coup by investment bankers.

In a sad irony, Corzine is portrayed as one of the few at Goldman today to address the issue of greed. In June, 1998, the firm's partners were deciding whether to go public, which would have made them all even richer. In contrast with the famous ''Greed is good'' speech by Gordon Gekko (a character modeled on Ivan F. Boesky) in the movie Wall Street, Corzine argued that going public would distribute the wealth more fairly among Goldman's roughly 16,500 nonpartner employees. ''Selling the firm in good times and spreading the largesse broadly, deeply, and generously would actually be less greedy,'' Corzine said.

Endlich leaves the distinct impression that the hard-driving Goldman partners agreed less with Corzine than they did with Gekko.


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PHOTO: Cover, ''Goldman Sachs: The Culture of Success''

BOOK EXCERPT: Chapter One of ''Goldman Sachs: The Culture of Success''

ONLINE ORIGINAL: Q&A with Lisa Endlich

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