Money and Power: How Goldman Sachs Came to Rule the World [Hardcover]

Try to get past the snake on the cover and the subtitle - there's nothing lazy or simplistic about this book. It's an amazingly complete look at an institution that says an awful lot about modern capitalism and how we got into this mess.

The most striking thing about the book is how much of it there is - almost 700 pages in the print edition. Mr Cohan has done a lot of research, interviewed an awful lot of people and come up with a lot of new facts. It's not for the faint-hearted - as a finance nerd I enjoyed reading for hours on how Goldman turned the subprime situation from a disaster to the foundation of global financial dominance, but many will have less patience.

The first half of the book covers the earlier history of the bank, and I'll confess I skimmed some of this. Mr Cohan uses this to build up to the central theme of what makes Goldman different from other banks; then, covering the period from 1998 on, the story changes gear and it becomes clear what we're hearing is based on verbatim accounts from interviews (and a lot of material that was subpeonaed by the US Congress).

Crucially, Mr Cohan has the skill to appreciate two things - in my experience it's rare for people to get both : just how good Goldman Sachs are at what they do; and just how few people outside the bank benefit from what they do. There's something deeply depressing about the maths genius (who found the Math Olympiad "laughably easy") who now spends his days building models to help good traders exploit suckers. Mr Cohan's refusal to follow the cheap sneer route makes the book actually all the more damning about our financial system.

Another of Mr Cohan's books "House of Cards" - covering Bear Stearns - makes an ideal companion to this book, covering as it does the *worst* of the investment banks, and the first to go under. If I had to define one thing about Goldman that defines it as a model of effectiveness it would be its trust in its people and hence its willingness to listen to relatively junior people, like those who picked up on the subprime meltdown and were allowed to build a bank-saving position. At the same time, the top men (and they were all men) at Bear were distracted by politicking and went under.

Yet even Goldman's skills were not enough, and the account of the rescue of the US financial system - as seen from inside its biggest beneficiary - are a compelling look at who controls our economy.

Mr Cohan writes well, has a nice sense of humour, and clearly a huge appetite for hard work. He bends over backwards to ensure he has the "Goldman line" on many of the accusations thrown at the bank, but shows no signs that I detected of having been "captured". If you read this book, you'll come away with a great sense of what makes a strong financial institution, but also a graphic account of how we created the environment where trading skills and political connections - rather than wealth-creating innovation - make a person fabulously rich.

This is a great book. Following William D Cohan's The Last Tycoons: The Secret History of Lazard Frères & Co.: The Secret History of Lazard Freres & Co. and House of Cards: How Wall Street's Gamblers Broke Capitalism on the crash on Wall Street I am not at all surprised that he has decided to publish an unauthorised history on Wall Street's enfant terrible, Goldman Sachs (GS). And he does an excellent job. In 2008, Charles D. Ellis published The Partnership: The Making of Goldman Sachs and whilst that is also a rather good book, I must admit that I prefer Cohan's writing style over that of Ellis.

About the first favour you can do yourself when you spot this book is to ignore the snake on the cover and the second title. I suppose they are there for marketing purpose but they confuse the issue. Once you have read the first 50-odd pages you are beginning to understand what a tremendous amount of research must have gone into the book.

Cohan tells the history of GS from its beginnings in 1869 and although it is a well-told story the more interesting period for me personally were the 1980s right up to now.
It seems that GS never really had any succession problems until the time Robert Rubin decided to join the Clinton Administration; every succession after that appeared to involve a lot of infighting. That's at least the impression the author left me with.
One of the things which horrified me was the insider trading scandal one of the GS chaps was involved in the 1980s and even though it became pretty obvious pretty quickly that the chap was innocent he still pleaded guilty to escape the witch hunt. That makes you wonder how many other innocent people ended up in prison just to get their privacy back.

The last 100-odd pages deal with the mortgage market crash. You do yourself a favour if you have read The Big Short: Inside the Doomsday Machine because it is excellent background information. You should also have a look at The Greatest Trade Ever: How John Paulson Bet Against the Markets and Made $20 Billion because it is a good account of John Paulson's investment strategy, which subsequently became that of GS.

If one were to look at this whole affair objectively (if that was possible) one ought to congratulate GS for coming to its senses and getting rid of its long position and shorting the market. At the same time, one ought to slap the heads of quite a few chaps from Bear Stearns and Lehman and a few other banks for betting their last shirt on one strategy without ever considering a potential downside. In hindsight this looked incredibly stupid.
I am not surprised that GS finds itself at the receiving end of the rest of the world. Success makes enemies, especially if it is one against the rest. Nevertheless, GS ought to continue to do what they do best and perhaps work on their PR a little bit.

All told I love Cohan's way of telling the story, his sense of humour and the suspense he manages to build up. Even though he uses a lot of information from GS it appears to be his own story rather than one written on behalf of GS.

Good show.

Whether you think Goldman Sachs is "doing "God's work" or acting like a money-sucking "vampire squid," William D. Cohan, a journalist and former investment banker, will challenge your opinion with his sweeping history of the vaunted Wall Street firm. From its beginnings in the 19th century to its dominance in the 20th and its slight ebb in the 21st, Goldman Sachs presents a fascinating case study of the talent, determination and hubris that informs Wall Street. Cohan compiles top reporting with interviews with Goldman's current and former leaders, and with insiders, outsiders, pundits and critics, to present a detailed, sometimes tedious but usually riveting look at the complex, secretive company. getAbstract recommends this history to those compelled by the enigma that is Goldman Sachs.