Liar's Poker Goldman Sachs

1. Liar's Poker Goldman Sachs Wealth Management
2. Goldman Sachs Bank

April 2001: Abby Joseph Cohen, Goldman Sachs. “The time to be nervous was a year ago. The S&P was overvalued, it’s now undervalued.”. Remember you’re playing liar’s poker at the Wall.

Ever bought a fake picture? The more you pay for it the less inclined you are to doubt its authenticity. That is how underlying motivation for the most sophisticated scams and frauds, from Madoff to 1MDB. While Goldman Sachs has been the subject of intense investigation and reporting, it may actually be the victim at the centre of an elaborate gambit. The case holds valuable high-level lessons for investment banking compliance, due diligence and KYC.

In May of 2010 Michael Lewis, a former Goldman Sachs bond salesman in London, had his book published called Liars Poker. He told his readers Goldman was defrauding their customers and had conflicts of interest. In a way, stocks today reflect what Mr. Lewis describes in Liar’s Poker, where Salomon Brothers merchandised the market’s ignorance about what priced bonds. We can do better by understanding how stocks are priced. Michael Lewis' 'Liar's Poker' has been a must-read for anyone who works on or cares about Wall Street since it was first published in 1989.It captures Lewis' time spent as a young bond salesman at. Author: Michael Lewis. Signed contracts with Goldman Sachs and Simon & Schuster, and paid lawyers more than I made. Author of STRAIGHT TO HELL (not about @gselevator or Goldman.

1MDB’s four-year fallout continues at Goldman Sachs as Andrea Vella recently became the third executive to be named and implicated. More than USD 4 billion was allegedly stolen from the Malaysian state development fund. Goldman is negotiating a fine of about USD 2 billion from the Department of Justice and trying to assign blame to the actions of its Singapore office. Glaring compliance failures were made evident in 2018 when Goldman partner Tim Leissner pleaded guilty to taking more than USD 200 million and paying bribes to government bureaucrats.

In a post-GFC age of compliance, the cold hard lesson of 1MDB for financial institutions is that compliance – especially at the most senior levels – is only as effective as executives’ collective ability to self-police hazardous deals involving politically exposed individuals. And therein lies the opportunity to be exploited and deceived by even the most credible counterparties.

Deception combined with greed corrodes judgement, no matter how well it is quantitatively supported. It can lead to a series of poor judgements, confirmation bias and even criminal conduct, in the way that high-risk clients are onboarded and complex structured transactions are executed. Goldman Sachs might have actually been set up as the “mark” from the very beginning.

The first step in a fraud is to understand what the “mark” really wants. Making them feel like they are doing you the favour is the key to ingratiating yourself. Besides lucrative fees and a large deal size, the public development purpose and top government leaders’ support of 1MDB helped it pass the initial test.

However, 1MDB appears to have been conjured up with the intention of defrauding investors without much effort to even hide behind economic development projects to cover the misdirection of funds. The ongoing trial of former Malaysian Prime Minister Najib Razak and investigation of the Malaysian financier Jho Low and his associates have so far yielded no clues for recovering the stolen funds.

It is especially disturbing to view the case as a massive fraud which from the beginning depended on enlisting a global investment bank to front the fund raising and transfer of monies.

Source: Liar’s Poker – The 1MDB Version

Liar's Poker Goldman Sachs Wealth Management

Liar's Poker is a non-fiction, semi-autobiographical book by Michael Lewis describing the author's experiences as a bond salesman on Wall Street during the late 1980s.^[1] First published in 1989, it is considered one of the books that defined Wall Street during the 1980s, along with Bryan Burrough and John Helyar's Barbarians at the Gate: The Fall of RJR Nabisco, and the fictional The Bonfire of the Vanities by Tom Wolfe. The book captures an important period in the history of Wall Street. Two important figures in that history feature prominently in the text, the head of Salomon Brothers' mortgage department Lewis Ranieri and the firm's CEO John Gutfreund.

The book's name is taken from liar's poker, a high-stakes gambling game popular with the bond traders in the book.

Overview[edit]

The narrative of Liar's Poker jumps back and forth between two different threads.

One thread is autobiographical: it follows Lewis through his college education, his hiring by Salomon Brothers (now a subsidiary of Citigroup) in 1984, and his training at the firm. It is a first-person account of the personalities, workplace practices, and culture of bond traders. Several high-ranking Salomon Brothers employees of the era, such as arbitrageur John Meriwether, mortgage department head Lewis Ranieri, and firm CEO John Gutfreund, feature prominently.

The book's other thread gives an overview of Wall Street history before focusing on the history of Salomon Brothers particularly. This thread is less dependent on Lewis' personal experience and features quotes drawn from interviews. It is primarily concerned with how the Salomon Brothers firm almost single-handedly created a market for mortgage bonds that made the firm wealthy, only to be outdone by Michael Milken and his junk bonds.

Biographical section[edit]

Lewis was an art history student at Princeton University, who wanted to break into Wall Street to make money. He describes his almost pathetic attempts to find a finance job, only to be roundly rejected by every firm to which he applied. For example, in 1982 Lehman Brothers had rejected his employment application. He then enrolled in the London School of Economics to gain a master's degree in economics.

While in England, Lewis was invited to a banquet hosted by the Queen Mother, where his cousin, Baroness Linda Monroe von Stauffenberg, one of the organizers of the banquet, purposefully seated him next to the wife of the London managing partner of Salomon Brothers. She hoped that his intelligence might impress her enough for her to suggest to her husband that Lewis, be given a job with Salomon Brothers. The strategy worked, and Lewis was granted an interview and subsequently received a job offer.

Lewis then moved to New York City for Salomon's training program. Here he was appalled at the sophomoric, obtuse and obnoxious behavior of some of his fellow trainees, and indoctrinated into the money culture of Salomon Brothers and the Wall Street culture as a whole.

From New York Lewis was shipped to the London office of Salomon Brothers as a bond salesman. Despite his lack of knowledge, he was soon handling millions of dollars in investment accounts. In 1987 he witnessed a near-hostile takeover of Salomon Brothers but survived with his job. However, growing disillusioned with his work, Lewis quit the firm at the beginning of 1988 to write this book and become a financial journalist. The first edition was published October 17, 1989.

Wall Street culture[edit]

The book is an unflattering portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices.

During the training sessions, Lewis was struck by the infantilism of most of his fellow trainees. Examples included yelling at and insulting financial experts who talked to them, throwing spit balls at one another and at lecturers, calling phone sex lines and then broadcasting them over the company's intercom, gambling on behavioral traits (such as how long it took certain trainees to fall asleep during lectures), and the trainees' incredible lust for money and contempt for any position that did not earn much.

Lewis attributed the bond traders' and salesmen's behavior to the fact that the trading floor required neither finesse nor advanced financial knowledge, but, rather, the ability and desire to exploit others' weaknesses, to intimidate others into listening to traders and salesmen, and the ability to spend hours a day screaming orders under high pressure situations. He referred to their worldview as 'The Law of the Jungle.'

He also noted that, although most arrivals on Wall Street had studied economics, this knowledge was never used; in fact, any academic knowledge was frowned on by traders.

Lewis also attributed the savings and loan scandal of the 1980s and 1990s to the inability of inexperienced, provincial, small-town bank managers to compete with Wall Street. He described people on Wall Street as masters at taking advantage of an undiscerning public, which the savings and loan industry provided in abundance.

Catch phrases[edit]

• Big Swinging Dick — A big-time trader or salesman. ('If he could make millions of dollars come out of those phones, he became that most revered of all species: a Big Swinging Dick.' p. 56.) The opposite of this term is Geek, used to refer to a just-hired trainee.
• Equities in Dallas — A particularly undesirable job within a finance firm. ('Thus, Equities in Dallas became training program shorthand for 'Just bury that lowest form of human scum where it will never be seen again' p. 58.)
• Blowing up a customer — Successfully convincing a customer to purchase an investment product which ends up declining rapidly in value, forcing the client to end up withdrawing from the market.
• Feeding Frenzy — The Friday-morning meal shared by a certain clique of bond traders. At this meal, traders would order astounding quantities of take-out food, far more than they could eat (e.g., a five-gallon tubs of guacamole with an order of $400 worth of Mexican food). The traders would then compete with each other to see who could display the most gluttony.
• The Human Piranha — Nickname for an employee ^[2] at Salomon Brothers who constantly used the word 'fuck' and its variants in his speech. A reference to Tom Wolfe's character in The Bonfire of the Vanities.
• No Tears — Used to describe a preset alternate rule Michael Lewis describes in the book, John Gutfreund challenges John Meriweather to a game of liar's poker, in which he states 'no tears' which means players of the game who lose can't complain about losing afterwards.

Reception[edit]

Despite the book's quite unflattering depiction of Wall Street firms and many of the people who worked there, many younger readers were fascinated by the life depicted. Many read it as a 'how-to manual' and asked the author for additional 'secrets' that he might care to share.^[3]

See also[edit]

• Lewis, Michael, The End, Condé Nast Portfolio, December 2008. Written by Lewis, this cover story can be read as the epilogue or wrap-up of Liar's Poker.
• David, Greg, 'The Securities Industry and New York City'^{[permanent dead link]}, Financial History, Museum of American Finance, Spring/Summer 2009.

References[edit]

1. ^Lewis, Michael, Liar's Poker, W.W. Norton & Company, 1989. ISBN0-393-02750-3. 'Archived copy'. Archived from the original on 2009-05-01. Retrieved 2009-05-25.CS1 maint: archived copy as title (link)
2. ^'The Human Piranha' is said to be Tom Bernard[1] who ran trading businesses for Salomon Brothers, Kidder Peabody, and Lehman Brothers for twenty-eight years on Wall Street.
3. ^ Simon Johnson and James Kwak, '13 Bankers: The Wall Street Takeover and the Next Financial Meltdown', (New York: Pantheon Books, 2010), p. 113-114 'citing' Michael Lewis, 'The End' 'Portfolio,' Dec. 2008

External links[edit]

• Liar's Poker (book details) - The Official Michael Lewis Website

Goldman Sachs Bank