<p>In this weekend’s WSJ, Peggy Noonan had a column wherein she describes some people as afflicted with a condition that she calls Goldmansachs head. Here is the column:</p>
<p>A choice quote from the column:
“I think there is an illness called Goldmansachs Head. I think it's in the DSM. When you have Goldmansachs Head, the party's never over. You take private planes to ask for bailout money, you entertain customers at high-end spas while your writers prep your testimony, you take and give huge bonuses as the company tanks. When you take the kids camping, you bring a private chef. Goldmansachs Head is Bernie Madoff complaining he's feeling cooped up in the penthouse. It is the delusion that the old days continue and the old ways prevail and you, Prince of the Abundance, can just keep rolling along. Here is how you know if someone has GSH: He has everything but a watch. He doesn't know what time it is.”</p>
<p>Before the financial scourge struck America and robbed millions of their life’s savings (not to mention threatened the educational fortunes of untold numbers of students), it all seemed so natural and was accepted as the way of things. But today, it all just seems so…gross. </p>
<p>They may have learned how to play and win the politically correct games, create the right public image, and position themselves for even more wealth and power. But they also never learned or forgot the difference between right and wrong. Where did these Goldmansachs heads learn their lessons???? </p>
<p>Given the outsized role that America’s elite universities have had in populating the Wall Street firms from which much of today’s financial/economic misery is sourced, is there something wrong with the instruction and culture at these colleges and the ethical behavior of the students that they regularly graduate and send to Wall Street? Did America’s elite colleges cultivate and expand Goldmansachs head?</p>
<p>I think people start believing their own bs.</p>
<p>Many elite school graduates are told they are among the best and the brightest and they start believing it.
Why not? It’s fun to think you’re one of the best and the brightest.</p>
<p>I don’t think it’s really fair to label graduates from “elite” colleges as “GoldmanSachs heads”.</p>
<p>Many graduates have morals and ethics and don’t live the “GoldmanSachs heads” way.</p>
<p>There are some workers at Goldman Sachs that are fine people too.</p>
<p>There is a stilted way of looking at the world at many of the elite schools. Too much group think. Not enough diversity of thought.
The schools need more poor people and people from different socio-economic backgrounds. </p>
<p>There was an article about a kid that went to Amherst. (Don’t have it). He was in an economic class. The subject was food stamps or something like that. The kid came from a poor family. He was sitting around a table with 11 other kids and none of them had a clue what life was like for people who live on food stamps. What’s worse is they were clueless and didn’t know it.</p>
<p>Then these kids grow up, go out in the real world and help make policy on issues they know nothing about.</p>
<p>One thing that is not understood real well is a person can be super bright in one area and ignorant in another.
That’s one of the problems at Goldman Sachs. You have these bright people working there and they think the laws of probability don’t apply to them.</p>
<p>As someone who has worked on Wall Street for 3 decades and couldn’t agree more there should be a diagnosis in DSM for many there, I really don’t think it has to do with elite colleges.</p>
<p>First, as I explain to many on the ibank board, there’s a personality looked for among those hired. That personality is then further molded once the hires get to The Street. I can’t begin to count how many people I saw vastly change within a couple of years. Most interesting, it’s a male thing, the women are far less likely to take on the extreme arrogance that is at the core of Goldmansachs Head.</p>
<p>Do keep in mind that the majority remain decent people. What happened at the banks and the bonuses last week have hastened the voluntary departures of many.</p>
<p>hmom,
I agree that there are plenty of decent, very smart people on Wall Street, but something happened to the leadership of these firms and the examples that they praised and promoted. I can’t imagine Goldmansachs head during the time of John Weinberg/John Whitehead and their predecessors. I can very easily imagine it being tolerated, even heavily promoted, under the leadership of Henry Paulson and Robert Rubin. I think Goldman ruined itself when it went public and they will now probably never get the genie back in the bottle again.</p>
<p>And I agree with you about the gender distinction, but that is probably because so few women make it on the Street and the women have probably been more humble throughout their careers in order to succeed in the organization.</p>
<p>"I think Goldman ruined itself when it went public "</p>
<p>Actually, a few years before that.</p>
<p>“I can’t imagine Goldmansachs head during the time of John Weinberg/John Whitehead and their predecessors. I can very easily imagine it being tolerated, even heavily promoted, under the leadership of Henry Paulson and Robert Rubin.”</p>
<p>Now you’re talking. I believe Weinberg would not have approved of his old firm’s direction even just a few years after he retired.</p>
<p>Wattya know, Hawkette, you know some things.</p>
<p>I don’t think this has anything to do with elite colleges. The industry itself actively breaded this type of personality, which in large part is what ultimately led to its downfall. (Of course not every IBanker is this way, but many are/were).</p>
<p>Oddly enough, Lloyd Blankfein, who actually is the “head” of Goldman Sachs (its CEO), was a classmate of mine at Harvard Law School, and was in my first year section, so I knew him very well back then; we were friends and had many mutual friends. I haven’t seen him in 30 years, and have no idea what he’s like now, but when I knew him, he was <em>nothing</em> like what’s being described. He was friendly, nice, not arrogant, not a jerk at all, and clearly wasn’t the “entitled” sort. Lloyd did go to Harvard College, but he grew up in Brooklyn, went to public schools (IIRC), and his father was a postal clerk. Of course I understand that making millions of dollars every year (I know he made more than $50 million a couple of years ago) changes people. But if he really does have “Goldmansachs head” now, he certainly didn’t have it, at all, in the years immediately following his graduation from an “elite college.” </p>
<p>So, like most generalized theories of this kind, things aren’t so simple in real life, as opposed to in newspaper columns. Not even close.</p>
<p>I DO know that MIT and Cambridge grads are responsible for dreaming up the Credit Default Swaps market that is darn near going to take out the world’s economies. Iceland’s currency, stock market, and government have already collapsed. Who knows who’s next.</p>
<p>It almost feels like a death-spiral of sorts. The draw of money and prestige at the end of the day launches the initial eager excitement for that investment banking interview. Once in, you are immediately poked and prodded against the rest of your analyst class. As a guy that went through this in early 2000s, I know the process well. All of my friends wanted to know which banks I had second round interviews with. What my offer was like. To be honest, I didn’t even know what investment bankers did …</p>
<p>Michael Lewis has a great piece in the National Business News called “The End” … must read for all of us “financiers” or wannabes :)</p>
<p>I’m always a little amazed when kids talk only about the draw of money and not even knowing what bankers do but showing up for the interview. Maybe it’s the difference between being an undergrad at Wharton and at other ivies. But there was a true breed on The Street who truly loved the puzzle of making things happen through mergers or a new financing thought. The true intellectual exercise of having a vision for globalization and wanting to be part of making it happen.</p>
<p>When the culture became one of just wanting the pay out, things went south.</p>
<p>Now who wants to talk about the pork in Obama’s bailout bill. It’s the same disappointing mentality.</p>
<p>Maybe it has something to do with what sort of people Wall Street chooses to hire, or what sort of people are attracted to Wall Street.</p>
<p>Maybe I’m reading too much into it because this is coming from hawkette, but this thread comes off as a transparent attempt to slam elite schools.</p>
<p>If anything, I felt that my elite school beat the entitlement complex out of most of its students with a baseball bat, figuratively speaking.</p>
<p>I am amazed too - however, it doesn’t mean that the “kids” are the problem. The investment banking profession (prior to the last 18 months) has been seen as a prestigious, exclusive and most notably, a monetarily rewarding career. You can’t blame college grads for being attracted to something like this. Especially the ones that go HYPS type of schools where they are constantly courted and exposed to these firms.</p>
<p>I agree that I didn’t major in investment banking and wasn’t quite sure what I was getting into - but neither did 95% of the other candidates. That was never a requirement to apply. What happens after they gave me the offer letter is another story!</p>
<p>If you get a chance, you should take a look at Michael Lewis’ follow up piece from his “liars poker” book. Its a fun read and very applicable to your post - I’m sure you’ll get a few chuckles.</p>
<p>As a fellow MIT alum, I had hoped that John Thain would somehow fly above this whole thing, that he was in fact such a technocrat that although clearly a beneficiary he could somehow ultimately exercise good judgement and critical thinking. Now that this seems to have been only wishful thinking I will say that I think that his attendance at MIT (he was an engineer for goodness sakes) had nothing to do with his armour and less to do with the irrationality of some of what he has said lately. I will attribute that to either HBS or Goldman Sachs itself. </p>
<p>There must be some sort of tonic that is able to convince 22 year olds that they somehow have earned that 500,000 bonus. I think those who were not earning it desperately wanted to think it was rational because if rational, then maybe someday they could do it do. All logic lost.</p>
<p>jessie,
In response to your suggestion that this thread is an attempt to slam elite colleges, that wasn’t my intention. I consider several of my favorite colleges (Stanford, Duke, Northwestern, Rice, Vanderbilt, Notre Dame, Georgetown, Wake Forest, etc.) in the elite category. Granted, these colleges have not historically sent the numbers of students to Wall Street as have the Ivies and MIT, U Chicago, etc, but I can’t completely exempt them either. </p>
<p>Some of dstark’s comments in #3 resonated with me: </p>
<p>“I think people start believing their own bs. Many elite school graduates are told they are among the best and the brightest and they start believing it. Why not? It’s fun to think you’re one of the best and the brightest… There is a stilted way of looking at the world at many of the elite schools… You have these bright people working there and they think the laws of probability don’t apply to them.”</p>
<p>My impression is that these elite schools have different personalities, some of which is created by the students who attend and some of which is influenced by what is valued on these campuses. I am wondering about the degree to which any (all?) of these schools breed a mindset in their students on their campuses and which gets warped when these students go on to positions of power and privilege and wealth in the working world, particularly Wall Street.</p>
<p>It’s important to realize this is not a cult and all do not think alike. This AM I had conversations with 2 first year analysts. Both have had a year to be indoctrinated. I’ve been out of the office for 3 months so haven’t been talking to these guys day to day.</p>
<p>Analyst #1 wanted my thoughts on what impact recent events would have on globalization. He wanted to know which sectors I thought would now consolidate quickly through mergers or acquisitions. He had a lot of his own thoughts to share on these topics and obviously had been doing research to formulate his own ideas. This kid loves his job, he wants to be part of saving corporate America. He is so busy trying to figure out workable deals that he doesn’t have time to ponder his ego’s next desire.</p>
<p>Analyst 2 wanted to know if bonuses would be the same 40% of 2007 bonuses next year. He wondered if he would have to stop flying business class and whether it was the end for private room dinners at his favorite steak house.</p>
<p>Clearly these two kids joined the bank for different reasons and there lies the divide that exists in all of these firms. Most teachers really wanted to teach and engineers are really into the process. At the banks this is an era of people really being into the money in large part. When money becomes the major draw, problems have to follow.</p>
<p>Then I thought about a recent conversation I had with a fifty something Princeton prof. He’s leaving Princeton citing the fact that in the last decade the pre profesional mentality that has taken over disgusts him. He enjoyed working with scholars he said, not classrooms full of would be ibankers.</p>
<p>Then throw in that during the dot com boom, ibanks went begging for analysts and associates. These kids decided Silicon Valley was the road to faster riches and the banks were getting the left overs.</p>
<p>Was the get rich quick mentality always there at elite colleges? I don’t think so but it’s decidedly at these schools today. So in that respect when I gave this more thought, the colleges do play a role in Goldmansachs Head. If this is what your peer group is thinking about and talking about, it’s hard not to be impacted.</p>
<p>At many other schools big bucks is a pie in the sky dream, not a matter of just being in the top 10% of your class.</p>
<p>I worry about any arena where money is the key draw.</p>
<p>First of all, I loved Peggy Noonan’s editorial. Secondly, don’t blame the schools. Not everyone ends up in corporate america without a shred of ethics. However, corporate culture is indeed to blame for the mess ups. You should read the authorized biography of Warren Buffet, The Snowball. The point made being that corporations became an interest group that served the interests of management and (sometimes) employees above that of the owners (stockholders). They looted the companies without producing value for their shareholders. Currently this goes a google for financial institutions in general.</p>
<p>However, not everyone is a thief with larceny in their hearts. Some execs are actually taking a small salary and trying to do a good job. Not enough, but some. Also don’t forget my favorite feel good in politics, Mayor Bloomberg and his one dollar salary.</p>
<p>I found some aspects of the culture in the world of finance that I was not that comfortable with.</p>
<p>Since my experience in that world, I am loathe to engage in any personal financial transaction without a competitive bidding process. This learned prudence has served me well.</p>
<p>And yes, some areas of Corporate America I personally experienced were not any better.</p>