The Weakness Of the Strong

“Lloyd Blankfein, the Chairman of Goldman Sachs now asserts that Goldman’s survival was never in doubt. Other Goldman executives reject the notion that the bank was rescued at all.” (See Thursday’s New York Times, “Despite Bailouts, Business as Usual at Goldman”)

What are we to make of these statements? Not only did Goldman accept TARP money from the federal government, but Blankfein was earlier quoted widely as saying that Goldman was threatened by the rising flood waters of the financial crisis. So why would Goldman deny it had been at risk?

There are two possibilities: either they say it because they want us to believe it, or they say it because they really do believe it themselves. That is, either they want to appear that they were stronger than they were, or they can’t accept that they weren’t.

Perhaps they think that by publicly asserting their invulnerability to crisis they can change public perception – and history. Brazenly denying something you don’t want others to believe can sometimes work. There are a lot of “birthers” out there, for example, who continue to insist that Obama was not born in the U.S., and therefore is not a legitimate President. As Charles Blow reminds us today: “A Daily Kos/Research 2000 poll released last Friday found that 28 percent of Republicans don’t believe that Barack Obama was born in the United States and another 30 percent are still ‘not sure.’ That’s nearly 6 out of 10 Republicans refusing to accept a basic truth.” Goldman may be relying on Republican gullibility.

The other possibility is that the Goldman executives really do believe it themselves. Maybe they now think that asking for TARP funds was merely a way of procuring extra insurance at a time when it seemed prudent to do so, if not essential. Perhaps now they regret having seemed to show a weakness in the face of a danger they retrospectively dismiss.

Frankly, I suspect that they are too smart to believe that a bald denial would convince the world; certainly they are too smart to care what the “birthers” believe. Occasionally, the “big lie” will carry the day, but the people they interact with are too smart themselves, too competitive, and too informed to be taken in by such a crude strategy.

The more likely explanation is that they are fooling themselves, saying what they have come really to believe. They are known to be brash and arrogant, in general, easily persuaded of their superior intelligence and trading savvy. Moreover, the amount of risk they have been taking lately suggests that they still relish danger – perhaps even more so now that they know how far the government will go to keep big banks from failing.

One of the major things we don’t know we know about ourselves is how far we will go to protect our self-esteem. Most of us think we are more intelligent and attractive than we are, and Goldman thinks it is more successful than anyone else. They are aided and abetted in this, of course, by a financial community in awe of its profits and a government that constantly recruits its top executives. Goldman may not only be too big to fail, but too proud to be wrong.