Thread by @EconomicManBlog

Just listened to this podcast with our own @StanphylCap (currently in Twitter jail in a great injustice) and @QTRResearch. Early on, Spiegel is searching for the name of a Goldman leader. The name was John Weinberg, Sr. This brought back a memory.

podcasts.google.com/feed/aHR0cHM6L…

So now, a la @Keubiko (but without the great graphics), a tale from investment banking.

I joined GS in the mortgage securities dept. One of the first deals I worked on was with GS as a co-manager on a Solly-led deal to securitize a bunch of funky mortgages made by (if I remember correctly) the FDA. It was going to be one of the first uses of the new REMIC law.

The deal was a beast. The loans had some really non-standard characteristics (deferrals, etc), lots of different coupons and maturities, and a bunch of different vintages. It used multiple layers of "stripping" and "tranching," and probably had about 30-40 different classes.

Because it was a new issuer, and a big deal, we had to go to the top-level commitments committee for approval. This grouped some of the most senior folks at GS, including Weinberg, Sr. (And Weinberg, Jr was in the mortgage department too, but that's another story.)

I was given the assignment of writing the memo to the committee. This was tough. I was pretty new to mortgages and this was a beast of a deal. After multiple iterations, and lots of red ink from other team members, it was done.

Then came the committee meeting. We are all sitting around a big table. Weinberg, Sr. shuffles in last and he announces (in his somewhat nasal and uncultured voice): "I read this memo and I have to admit, I didn't understand a single word."

And we all laughed. Because it was true. Weinberg, Sr. was like the last of the old-line GS partners. Not the sharpest knife in the drawer but a fundamentally decent human being who actually thought that serving the client is what made GS great.

During my 10 years at GS, this is what completely changed as the firm became more and more predatory, and the somewhat schleppy Weinberg Sr's were replaced by a new generation of smarter sharks who absolutely do not have your interests at heart.

Which is why, after I left the firm, I never did business with GS. What they offer is rarely better than what you can find elsewhere on the Street but it always comes with the firm knowledge that, if there is ever an opportunity, they will screw you.

And nobody writes contracts well enough to avoid every opportunity.

And that is the end of this Tale from Investment Banking, including a moral of the story.