The next Goldman acquisition

By Felix Salmon
July 16, 2009

Every so often, Andy Borowitz nails it:

In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.

According to Goldman spokesperson Jonathan Hestron, the merger between Goldman and the Treasury Department is “a good fit” because “they’re in the business of printing money and so are we.”…

Mr. Hestron said the only challenge facing Goldman in completing the merger “is trying to figure out which parts of the Treasury Dept. we don’t already own.”

Meanwhile, Mark Gimein attempts a peculiar defense of the squid:

The rhetoric of the outrage has come full circle: Where, before, the villains were the banks that were stupid and greedy enough to fail, now the villains of the moment are those—a very small club, basically just Goldman and JPMorgan Chase—that have been smart and greedy enough to succeed.

Is it fair to say that Bear and Lehman were stupid, where Goldman and JPM are smart? Not really. In a universe of greedy bankers, some will fail and some will succeed. There’s no particular reason to believe that success is directly correlated with intelligence — in fact, as Gimein himself points out, there’s a long history, from Drexel to Enron, of smart people making spectacular profits before blowing up even more spectacularly. Higher profits generally mean higher risk — and if the US taxpayer is going to have to pay the bill if and when Goldman implodes, we should be able to ratchet down that risk. Or, at the very least, take for ourselves some of the upside when things go well.

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