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Goldman’s Oscar-Worthy Bad Guy Role

Venezuelan protesters carrying signs and white flowers
Venezuelan protesters, April 2107. Photo by Wikimedia user Jamez42.

They must be hiring would-be movie stars at Goldman Sachs these days, because someone near the top of the organization deserves an Oscar for “best portrayal of a callous, evil banker.”

That is a stereotype, of course. The real artistic genius is that Goldman succeeds so brilliantly in bringing that character to life – all-too-real life, that is.

Maybe you missed the movie. In the opening scene, virtually an entire nation (portrayed by Venezuela) is broke, starving and miserable, trampled by a socialist kleptocracy headed by a stooge who inherited his post from a deceased, Mussolini-esque strongman. The stooge is clinging to power only by usurping the congress, co-opting the judiciary and making military officers and enlistees alike dependent on his handouts.

In turn, the military turns back protests by using gas and bullets, and even by running over demonstrators in armored vehicles. Meanwhile, pregnant mothers desperately flee to Colombia, or any other haven they can find, just to obtain basic neonatal care. Back at home babies and the elderly starve, and former professionals pick through garbage dumps to try to survive.

In the corridors of the capital, darkened by the nation’s chronic power cuts, the regime’s lackeys desperately seek sufficient funds to maintain their grip on society.

It is at this moment that the Goldman Sachs banker arrives on the scene, straight from central casting, outfitted in wingtips and a silk power tie. Goldman will buy the bonds issued by the regime’s oil company, at a 69 percent discount. Even at such a big haircut, the offer represents a cash infusion of hundreds of millions for the oppressors and a boot on the neck of the oppressed. But Goldman sees opportunity in the misery. The logic, Goldman’s quantitative-driven business graduates explain to their bosses, is that the regime must eventually fall – and that when it does, those who are currently miserable can be counted upon to repay the debt that kept their oppressors in power. The debt’s value will soar, and Goldman will profit handsomely.

The scene sounds like pure Hollywood, but the salient details come from The Wall Street Journal, which reported Goldman’s purchase. The Journal said that Goldman had purchased about $2.8 billion in Venezuelan bonds through an unnamed broker, according to people familiar with the transaction.

When the news broke, there was a predictable outcry from those opposing Venezuela’s current administration, mainly from within the country’s borders. Bloomberg reported that Julio Borges, the opposition legislator who heads Venezuela’s National Assembly, wrote a letter to Lloyd Blankfein, Goldman’s CEO, expressing his dismay and anger. Borges called the transaction “a financial lifeline to [President Nicolas Maduro’s] authoritarian regime that is systematically violating the human rights of Venezuelans.” Opposition lawmaker Angel Alvarado, a member of the country’s congressional finance committee, said, “Goldman is putting itself on the wrong side of history with this deal.”

In an emailed statement following this criticism, Goldman Sachs countered: “We recognize that the situation is complex and evolving and that Venezuela is in crisis. We agree that life there has to get better. We made the investment in part because we believe it will.” This sentiment strikes an especially discordant note arriving just days after Ricardo Hausmann, a Venezuelan-born Harvard economist, publicly urged JPMorgan Chase to remove Venezuela from its bond indexes so fund managers would not feel pressured to support a government accused of multiple human-rights violations.

“You don’t want to have investors have to have moral qualms about what’s happening to their savings,” Hausmann told Bloomberg Television.

Cut to back home, in the flatteringly lit corridors of power in New York and Washington. Goldman’s gambit gets relatively little notice here, until it emerges that the people it has been financing in Caracas have also been conspiring with Syrians, and their Russian and Iranian sponsors. The plot is designed to evade international sanctions by laundering Syrian oil through a Venezuelan-controlled refinery in Aruba. It never gets off the ground, and not a single barrel of oil moves through the illicit back channel. But with Democrats still embarrassed over the disintegration of Syria on the former president’s watch, and Republicans eager to prove that the current administration is willing to confront Damascus and its Russian sponsors on all fronts, the stage is set for new sanctions on Syria – and for all sorts of opprobrium to come down upon Goldman Sachs. Even the presence of the firm’s former executives in some of the current administration’s top positions cannot shield it from the universal contempt its behavior earns.

The best thing about Goldman’s performance, in the eyes of the Academy, is that it is so lifelike – because it is, in fact, true. True, at least, up to the point of the sanctions and universal contempt, along with the rough justice apt to be meted out in the inevitable sequel, though all of these are quite likely to follow. After all, the Justice Department has tried to cast Goldman in this role before, based on a much flimsier performance than this one.

It’s not that you can’t make this stuff up. It’s just that in this case, you don’t have to.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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