Goldman emails show rise of technology and traders

April 27, 2010

Embarrassing emails aren’t new to Wall Street. After the dotcom bubble, star tech analysts were condemned for sending messages mocking the same stocks they urged investors to buy. Now Goldman Sachs is in the spotlight after Senate investigators uncovered correspondence from current and former executives which suggest they were anticipating the collapse of the mortgage market even as they flogged related products to clients.

What’s most striking about the messages, however, is who wrote them. Goldman’s senior executives have long preferred voicemail over email for confidential communication. Indeed, some Goldman bankers believe it was this technological difference that helped the bank to dodge the Internet-related scandals that tainted rivals Merrill Lynch and Citigroup: voicemails are harder for investigators to scan.

Goldman is still a heavy user of voicemail. After the U.S. Securities and Exchange Commission filed fraud charges against the bank, Chief Executive Lloyd Blankfein used company-wide voicemail messages to convey his defiance to employees. But emails released by the Senate subcommittee on investigations – and by the bank itself – suggest an increasing dependence on written messages.

The shift is partly technological. The ubiquitous BlackBerry has made it easier for workaholics to use email to stay in touch with colleagues. The ill-advised use of corporate email by junior banker Fabrice Tourre is evidence of how the Facebook generation blends its work and private lives, sometimes at the expense of privacy.

But the Goldman emails also provide evidence of the power shift at the bank over the past decade. Voicemail was particularly favored by the investment bankers who once held the upper hand: former boss Hank Paulson was a well-known technophobe who never used email. But in Goldman’s giant trading businesses, email has become the dominant form of communication. Some traders have apparently never even activated their voicemail accounts.

Goldman executives were not entirely blind to the risks. Senate staff found that exchanges about potentially sensitive topics were often punctuated with an acronym: LDL, for “let’s discuss live.” As Goldman attempts to rebuild its reputation, it’s teenager-like shorthand that sophisticated bankers should probably embrace.

Comments

So everything would all right if they just hadn’t got caught…?

That’s what it sounds like you’re saying.

Posted by HBC | Report as abusive
 

There’s no moral judgment here on their actions. He’s just saying how the work (good or evil) is less controlled by the Patriarchs who learned lots of mob tricks, and increasingly run (whether they knew it or not) by the lower tier guys who are working their way up the ladder.

Posted by Jarlent | Report as abusive
 

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This post was mentioned on Twitter by financebabes: Goldman emails show rise of technology and traders http://bit.ly/aEXgPT…

 

How to sell junk papers and make tons of $$:

1. Buy $50M of junk papers.
2. Sell more of the junk papers to clients saying that you are also buying the junk paper. That will convince a client because your are risking your own money too.
3. You short the junk paper for $500M, but your clients don’t know.
4. The junk paper goes south and the clients have big losses.
5. The client calls you back and you can say “we are sorry we lost $50M too.” the perfect cover.
6. You lost $50M but made $500M from the short position.

Posted by axiom321 | Report as abusive
 

I earned the Getty Oil Company shareholders 4 Billion Bucks
On the Reserve acquisition; the way they treat me — it really sucks!
As the Getty inheritors bask in glee;
All I asked for was that they look after me.
Four billion dollars they earned on Reserve
My fee I surely deserve.
It turns out J.P. Getty may have been a Nazi;
His family even goes back to Germany.
With Hitler, Goring & Goebbels he did stand;
While trying to undermine the American land!
For paintings & artifacts he did receive
With his oil he was able to deceive?
Hoover & the FBI & Roosevelt they knew
That J.P. Getty & espionage he drew!
Many a young lad and Jew did die
As planes dropped bombs from the sky.
For years while Getty sat in Berlin
He may have committed many a sin.
The ashes and smoke from the chimneys it rose
While old man Getty sat cozy; he chose.
With artwork held tightly under his arm
Still dripping in blood — as the real owner met harm.
Into the ovens & on meat-hooks, bullets between the eyes
Listen very carefully you can still hear their cries!
While the Gettys sit in England; at their estate at Wormsley
And Gordon sings in San Francisco
With his 727 in tow.
The Getty museum sits atop Malibu
While the corpses of World War 2 scream — J.P. Getty — We know you!

Excerpt from … 4 BILLION BUCKS

Posted by MACDONALDBANK | Report as abusive
 

What is next ? after all this show off and time consuming ,is any thing going to change with these people and their principles ???

Posted by Turtlepro | Report as abusive
 

Ticker Tape/Letters/Email/Voice mails/Instant messages. What does it matter fraudster will always exist and will need to communicate.

What people need to do is not listen to the fraudsters.

Let’s see:
1907 – financial collapse on too much credit – bail-out be JP morgan
1929 – financial collapse on too much credit – bail-out by FDR
1968 – Stock collapse – stock swindlers exposed
1987 – Stock collapse – too much credit – insider trading scandals – junk bond scandals
1993 – Saving and loan scandal – RTC bailout – $400B by tax payers
2000 – Dotcom scandal – new economy – financial collapse – Stock fraud – analyst/CEOs jailed
2008 – Real Estate collapse – too much debt – taxpayer bailout

2012? – Soveriegn debt crisis? Bail out by? maybe no one

on and on…..

Posted by freedomadvocate | Report as abusive
 

So are you reminding Goldmen et al that they shouldn’t be using blackberries or to shred their emails and paper trails now before they also get caught? I am sure they all know that and have been clamboring for the last week to do so.

So what is your point? Are you scolding them for not being sophisticated enough to ensure no paper trail of their corruption, even though some senior staffers were more diligent in that process?

Yes, how silly of those younger upstarts to not be as adept at hiding their unethical behaviour and use the newest mass media technology! Tch tch! How unsophisticated!

Posted by hsvkitty | Report as abusive
 

You can tell how the higher, and older, execs of the company were so much “smarter” in answering questions before the Senate, esp. the CEO.

Posted by geminibb | Report as abusive
 

Someone once said “Greed is good.” At Goldman, the saying is “Greed is Golden.” One assumes from the contents of email and responses at Senate hearings, that ethical behavior at Goldman is based on the Gold Standard, what creates gold for Goldman is ethical. It might be a good idea Wall Street stopped reading “Atlas Shrugged” and started reading “Democracy in America”. (No disrespect to Rand, she is grossly misinterpreted by these people.)

Posted by billgkohl | Report as abusive
 

Must be full moon – worst comments ever.

Posted by BigBadBank | Report as abusive
 

No full moon, just bright daylight on you guys and you’re looking pretty ugly.

Posted by billgkohl | Report as abusive
 

On the subject of imposinging restrictions on financial markets, here is a quote on restrictions of Free Markets from Adam Smith’s Wealth of Nations. His observation was occasioned by financial calamities brought about by the practice of “drawing and redrawing” of Bills of Exchange (of which it has been said, “Credit transactions involving bills of exchange are difficult to untangle, even challenging the talents of Adam Smith, who cited the difficulty of the subject of bills of exchange as credit instruments in the Wealth of Nations”). He is discussing methods of restricting the issuance of these bills is a way that would prevent the future occurrence of such calamities.

“To restrain private people, it may be said, from receiving in payment the promissory notes of a banker for any sum, whether great or small, when they themselves are willing to receive them; or, to restrain a banker from issuing such notes, when all his neighbours are willing to accept of them, is a manifest violation of that natural liberty, which it is the proper business of law not to infringe, but to support. Such regulations may, no doubt, be considered as in some respect a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as or the most despotical. The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.” Smith, Wealth of Nations, 1776.

Posted by billgkohl | Report as abusive
 

Peter I had to chuckle when I read your piece.You have dared to mention the unspoken truth:They were very careless!
Not at all surprising.It is all part and parcel of the hubris that is most definitely not in short supply among the Wall Street types.

Posted by MHB | Report as abusive
 

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