Goldman on the Bridge: The Firm That Would Be King

April 22, 2010

In Rudyard Kipling's novel "The Man Who Would Be King," we are introduced to Daniel Dravot and Peachey Carnehan, perhaps best described as 19th Century con men and adventurers who managed to become Kings of the Kafirs.  At one point, Dravot managed to convince his followers that he was a god -- a descendant of Alexander the Great -- which, if you think about it, is far better than a mere king.

Alas, Dravot and Carnehan should have left well enough alone.  When Dravot decided to marry a Kafir girl, she bit him when he tried to kiss her.  Unfortunately, Dravot bled from the bite. Gods do not bleed. 

Seeing that Dravot was "Neither God nor Devil but a man!" his followers abandoned him.  Dravot walked out upon a rope bridge high above a gorge, bedecked with his crown, and the rabble cut the rope cords.  Dravot fell to his death. Carnehan was crucified but allowed to live when he survived through the day, only to eventually die a lunatic and a beggar.

In watching the unfolding drama of SEC v. Goldman Sach & Co., I have been asked if I think that Goldman will survive.  Oddly, I can't but help think about Dravot.  Goldman is not a mere mortal king but has been viewed in some circles as a god on Wall Street.  Unfortunately, when Goldman kissed Paulson, the latter bit and the former bled; and now Goldman is astride the rope bridge, bejeweled and crowned but imperiled as the SEC hacks away.

No, I don't think that Goldman will die a tortured death, but the would-be God-King of Wall Street is not coming off that bridge with its crown.  If Goldman fights the SEC case in court, the negative publicity will be disastrous.  That could well be the first snap of twine over the gorge.  If Goldman settles with the SEC, it will be damaged and hamstrung by whatever undertakings are imposed.  Clearly, this majestic deity has publicly shed its own blood and revealed itself as something far less than what it once was.  There's just no going back from that.

While I may criticize the motivation and timing of the SEC's case, while I may criticize the integrity of the Complaint and the allegations contained therein, I do not criticize - I applaud - the long overdue recognition by Wall Street's regulators that they have coddled the mighty and powerful for far too long.  Pointedly, there is nothing alleged in the Complaint that Goldman or any of the parties and participants should point to with particular pride. It is back-stabbing and double-dealing, no matter how permissable those acts may legally have been. The simple fact that you can do something is not, in and of itself, a compelling reason to do it.  That is why we talk of ethics and morality -- as alien as those concepts may be in the marketplace. 

Perhaps now, with the public permitted this rare glimpse behind the curtain, others will better understand my long ignored cries for reform. The practices exposed in SEC v. Goldman  are not shocking or surprising to most industry veterans. We have long seen Wall Street's cops look askance.  We are used to the disparate treatment afforded the big boys versus the small fry.  

Goldman has walked itself out on the bridge. I have no pity for the predicament. If only we could send some of Wall Street's regulators onto that same span. 

For those of you unfamiliar with the story of The Man Who Would Be King, please see this clip from the wonderful film with Michael Caine and Sean Connery: