Goldman emails show rise of technology and traders
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.