Wall Street Whispers: Goldman's Rep (And Hank Paulson's)

Hated by Main Street, Goldman Sachs still has a loyal following on Wall Street, many of whom would love the chance to jump on board its gravy train. Meanwhile, one of its former CEOs offers ideas for GSE reform.
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) -- For all the negativity surrounding

Goldman Sachs

(GS) - Get Report

for the past few months, it may be surprising to hear that people still really love working there, really want jobs there and really support its much-maligned CEO

Lloyd Blankfein.

Lloyd Blankfein, chairman and CEO of Goldman Sachs, testifies before the Senate Homeland Security and Governmental Affairs.

An analysis of employee sentiment by Glassdoor.com to be released on Friday found Goldman to be the best bank to work at, with Blankfein receiving a 97% approval rate. Goldman ranked No. 2 on list of 113 financial firms, receiving a 3.8 rating out of a possible 5. (It's just behind Susquehanna International Group, another Wall Street firm that's privately-owned.)

The results show exactly what Wall Street's been whispering about, though not saying directly to Main Street: We're no more guilty than you and we like who we are better.

Bank executives grumbled about taking the taxpayer dollars they used as a crutch for survival. Instead of supporting regulations to protect the system, banks are now working to find ways around them. Instead of explaining its role in the broader economy, Wall Street shrugged off a wave of public disapproval with an attitude that screamed: "Who cares what they think? We're smarter than them anyway."

The arrogance is astonishing to those in the "real economy" who are trying to make ends meet while the banking industry prospers. Since the backlash became more pronounced, banks haven't been saying much publicly about how they're often characterized by politicians and the press -- mainly because their attempts at damage-control have so far

fanned the flames of discontent.

Wall Street may never apologize for its wrongs. In fact, bankers, traders, management and their lawyers often seem befuddled by the demand for remorse.

For instance, Ed Rataj, managing director of compensation consulting at CBIZ Human Capital Services, explains how board members view the public firestorm over multi-million-dollar pay packages at bailed-out firms.

"I don't think it's changed the perception of what the right thing is among board members," he said in

a recent Q&A with


. "I think board members' perception of what the right thing is hasn't changed. The question is, 'Can we do the right thing without the politicians or the media grandstanding about it?'"

He added that, Andrew Hall, the Citigroup trader whose $100 million pay package set off a PR nightmare that led to Citi's divestiture of his trading group is "a perfect example."

"All hell broke loose politically," said Rataj, "but at the end of the day, he was worth every penny."

In that regard, it's worth noting that Goldman may receive high marks from employees due to its handsome pay packages. Its compensation-to-revenue ratio is over 40%; its compensation-to-employee ratio is over $115,000; and top-performing executives and traders have the potential to earn millions. Its compensation structure is known for being one of the most luscious -- if not the most luscious -- on Wall Street.

Ron Geffner, a partner who oversees the financial-services group at the law firm Sadis & Goldberg LLP, says recent trash-talking about Goldman was also fueled by competitors who felt Blankfein & Co. were finally getting their just desserts.

"Goldman seemed to be the firm that everybody loved to hate," says Geffner. "It's similar to the Yankees, it's similar to the United States vs. other countries. All the people in the brokerage industry, all the bankers in the room, would look to Goldman and were angry about it -- because they were envious!"

A veteran investment banker agrees that Goldman has a reputation as the golden goose of employment, but says it's about more than compensation.

"Goldman is still a phenomenal firm -- notwithstanding the trashing that they've taken," says the one-time Wall Streeter. "People love to work there not only because of the clients that they have but also the quality of the employees. It's really an awesome place."

The former executive, who previously worked at a bank with a large presence on Wall Street, broke down some reputations for



He says

JPMorgan Chase

(JPM) - Get Report

is also considered one of the best places to work.


(C) - Get Report

is considered a "boiler shop," and

Morgan Stanley

(MS) - Get Report

"gets good marks" but isn't entirely up to snuff. He didn't offer an analysis of the

Bank of America

(BAC) - Get Report

-Merrill Lynch franchise, which may be telling in and of itself.

The former executive went on to say that JPMorgan didn't always have such a stellar reputation, but CEO Jamie Dimon has improved it tremendously since taking the helm in 2006. JPMorgan learned during the tech bubble to be "much more careful about how they hired people so they didn't have to let them go," he adds.

Meanwhile, Swiss banks

Credit Suisse

(CS) - Get Report



(UBS) - Get Report

are known for employing tireless workhorses, according to the source. The word on The Street about Germany's

Deutsche Bank

(DB) - Get Report

is that employees seem a little disconcerted by its recent shift in strategy. Once primarily a trading house, Deutsche Bank has been marching into previously uncharted investment-banking territory to better offset volatility.

Worker bees who offered their views to Glassdoor.com offered a slightly different spin.

JPMorgan ranks 37 out of 113 firms, with Dimon receiving just an 87% approval rating. Morgan Stanley was 10 notches higher, with employees 100% satisfied with new CEO James Gorman's performance.

Credit Suisse, Deutsche Bank and UBS were all fairly high on the list, while Citigroup was close to the bottom. Employees only report "dissatisfaction" with four businesses: AXA Advisors, First Data, Sallie Mae and Société Générale, with SocGen rounding out the bottom of the entire list.

Yet, it's worth pointing out that Morgan Stanley insiders are known for believing the firm's reputation is a lot better than it actually is -- while playing catch-up with competitors.

Additionally, there are splits within the ranks: Banking divisions that serve Main Street evaluated their experience differently than those full of hot-shot traders. Bank of America ranked above Merrill Lynch in the Glassdoor.com survey; Citigroup Global Markets ranked at 74 vs. 96 for Citibank - even though the components are all theoretically part of the whole.

One would-be Wall Streeter summed up the situation nicely.

At a recent social gathering, he explained why he accepted a job offer from a small money-management firm after college: "It's not like Goldman Sachs came knocking at my door. I'd have killed for a job there."

Hank Who?

Henry Paulson seems to know the way forward for housing-finance reform. Too bad no one will pay attention.

The former Treasury secretary penned an op-ed in

The Washington Post

that published Thursday evening online, providing his thoughts about

Fannie Mae



Freddie Mac


and other government-sponsored enterprises. His thoughts are down to earth and more concrete than anything the Obama administration has put forth to date.

Former U.S. Treasury Secretary Henry Paulson

The topic is finally garnering some attention, though. Current Treasury Secretary Tim Geithner is heading to New York on Monday to discuss "the next steps for financial reform." The Treasury will also host a conference in Washington next month for academics and policy wonks to finally start talking about what to do with Fannie and Freddie.

As for Paulson, his ideas were

immediately panned

by those who dominate the online-news conversation for two reasons. First, because he implied that the status quo is OK (since it has to be OK to fly politically). Second, because he presented it in a manner that screams, "Please listen to me -- I'm still important."

Paulson could have held a press conference; he could have reached out to several news outlets; he could have made a YouTube video. In other words, he could have diversified a bit. Instead -- in a move similar to congressional Republicans who

have concrete ideas about GSE reform -- Paulson ended up speaking to hear himself talk, not to move the dial.



has a storied history, but it's also a publication that Beltway insiders use to communicate with other Beltway insiders. It resonates with far fewer in the millennial generation who will be paying for "housing-finance reform" than other venues where Paulson might have taken his thoughts.


has been reaching out to Henry Paulson's spokeswoman and various other potential "handlers" for over two weeks. After covering Fannie and Freddie for the past couple of years, I considered him to be one of the few officials who took housing-finance reform as seriously as it needs to be taken.

One reason: On his way out of Washington, Paulson did something he didn't have to do and probably didn't want to do. He put himself in front of lawmakers (for the umpteenth uncomfortable time) to offer suggestions about the GSEs. Given his experiences at the later end of his tenure, it's only logical to assume that he did this because he considered it to be important.

In a speech on Jan. 7, 2009, just before President Obama took office and Paulson left office, he said the following, regarding Fannie and Freddie's push for shareholder rewards while concurrently receiving implicit taxpayer support:

"While policymakers of every ideological stripe have acknowledged the risks created by this conflict, entrenched debate, often with little recognition of market realities, prevented reform. ... Even as Washington debated GSE oversight, there was little debate over the extent to which government should subsidize homeownership, and whether such government support was contributing to a housing bubble."

Over a year and a half later, Obama's team seems to have finally gotten that


. That's just one example of Paulson's acknowledgement of problems within an agency he apparently didn't have enough time to get his arms around, despite being placed into his role a couple years ahead of Fannie and Freddie's collapse. But at least he was able to offer a subtle "mea culpa" while offering concrete ideas for reform.

The response from the Obama administration -- as well as lawmakers who were once Fannie-Freddie cheerleaders -- in the intervening time has been shameful by comparison. There was no mention of GSE reform in the sweeping financial reform bill passed this month, apart from telling the Treasury that it needs to provide recommendations by January of next year. Queries about any specific policy agenda have been rebuffed; the issue has been put off; statements regarding housing-finance reform by top officials have been bland and meaningless.

In his op-ed, Paulson outlines some sensible ideas, relative to a political environment that some on Capitol Hill with decades of experience describe as more partisan than it's ever been in their lifetimes.

Paulson recognizes how great a role Fannie and Freddie play right now in stabilizing the mortgage market. (Perhaps that's why he put them into conservatorship.) He also recognizes that homeownership is so ingrained in the American fabric that it's tough to separate it from taxpayer-financed policy.

Yet, he also recognizes that not only can they not operate the way they have in the past, he also promotes a policy that would essentially turn the agencies into utilities -- ones that have shareholders, but are clearly backed by the government and must meet clear federal standards in order to do business. The parameters of their profits would essentially be capped.

It's not a novel idea; by some arguments it's not the perfect solution. But at least it is a solution.

"It will take real leadership from both parties to get it done," Paulson said in his op-ed. "But this is vital, and the discussion must begin now."

Not that the Obama administration is eager to take words of advice from a former Goldman CEO under whose watch the housing market fell apart. But hopefully, someone in a position to do something about GSE reform will put words into action.

-- Written by Lauren Tara LaCapra in New York


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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.