Goldman goes off-message

By Felix Salmon
August 6, 2009
this to the NYT's Jenny Anderson?

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Goldman Sachs bankers are generally smooth, urbane, and on-message. But these days they’re clearly flustered. Why else would Goldman president Gary Cohn say something as arrogant and tone-deaf as this to the NYT’s Jenny Anderson?

“Our risk appetite continues to grow year on year, quarter on quarter, as our balance sheet and liquidity continue to grow,” Mr. Cohn said.

This perfectly fits the Michael Kinsley definition of a gaffe — when a politician accidentally tells the truth. What Cohn should have said is exemplified by his colleague, CFO David Viniar, five paragraphs later:

“There are a few business units that are taking a little more risk. Most are taking less,” Mr. Viniar said.

But the cat’s out of the bag at this point — and even if Cohn hadn’t said it in as many words, Goldman’s soaring profits and VaR tell the story.

Goldman is a bank holding company now; it shouldn’t be able to thumb its nose at its new regulators in this manner. But it will clearly continue to do so unless and until one of those regulators takes a deep breath and cracks down on all this risk-taking and increased leverage. So, who wants to be the regulator who went up against Goldman?

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