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| Why Theresa May shared her Brexit fears with Goldman Sachs Why Theresa May shared her Brexit fears with Goldman Sachs | |
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| When the Guardian reported this week that Theresa May had privately made a passionate case for Britain’s continued membership of the EU shortly before the referendum, it didn’t look great. The problem wasn’t her opinion: she was saying the sort of things a member of the remain campaign was supposed to. The problem was that she wasn’t doing so in public – and the audience for her secret pitch was a select group of bankers from Goldman Sachs. | When the Guardian reported this week that Theresa May had privately made a passionate case for Britain’s continued membership of the EU shortly before the referendum, it didn’t look great. The problem wasn’t her opinion: she was saying the sort of things a member of the remain campaign was supposed to. The problem was that she wasn’t doing so in public – and the audience for her secret pitch was a select group of bankers from Goldman Sachs. |
| May is very far from the first politician to accept such an invitation. She has, for example, put herself in the same category as Hillary Clinton, who between resigning as US secretary of state and running for president made a number of highly lucrative speeches for the same bank. For both politicians, the idea that they are giving off-the-record briefings to the banking industry that stand at odds with their public pronouncements makes for very bad publicity indeed. For the spin doctors at Goldman Sachs, on the other hand, this must have been a pretty good week. | May is very far from the first politician to accept such an invitation. She has, for example, put herself in the same category as Hillary Clinton, who between resigning as US secretary of state and running for president made a number of highly lucrative speeches for the same bank. For both politicians, the idea that they are giving off-the-record briefings to the banking industry that stand at odds with their public pronouncements makes for very bad publicity indeed. For the spin doctors at Goldman Sachs, on the other hand, this must have been a pretty good week. |
| That’s not to say that “Goldman” or “Goldmans” – as insiders call the bank – is in general enthusiastic about publicity. Much like Fight Club, the first rule of the City is that you do not talk about the City: especially at major banks, unauthorised contact with reporters or researchers is grounds for immediate dismissal. Nowhere is this rule enforced more vigorously than at Goldman. There isn’t even a sign with the bank’s name on at its City HQ. | That’s not to say that “Goldman” or “Goldmans” – as insiders call the bank – is in general enthusiastic about publicity. Much like Fight Club, the first rule of the City is that you do not talk about the City: especially at major banks, unauthorised contact with reporters or researchers is grounds for immediate dismissal. Nowhere is this rule enforced more vigorously than at Goldman. There isn’t even a sign with the bank’s name on at its City HQ. |
| In the absence of a more conventional PR strategy, though, visits from the likes of May and Clinton serve a very useful purpose. Other banks may have good risk management, but none has Goldman’s mystique, or its network of former employees, from the European Central Bank president, Mario Draghi, to the Bank of England governor, Mark Carney, and former US Treasury ministers Hank Paulson and Robert Rubin. Goldman loves to present itself as the bank that is better than any of its competitors at drawing the most powerful decision-makers into its orbit – for example, hiring the former EU leader José Manuel Barroso earlier this year. All of this helps with recruitment as well as with holding on to staff. And so, publicity shy though Goldman may be, the outcry over May’s speech this week makes it look exactly the way it wants to. | In the absence of a more conventional PR strategy, though, visits from the likes of May and Clinton serve a very useful purpose. Other banks may have good risk management, but none has Goldman’s mystique, or its network of former employees, from the European Central Bank president, Mario Draghi, to the Bank of England governor, Mark Carney, and former US Treasury ministers Hank Paulson and Robert Rubin. Goldman loves to present itself as the bank that is better than any of its competitors at drawing the most powerful decision-makers into its orbit – for example, hiring the former EU leader José Manuel Barroso earlier this year. All of this helps with recruitment as well as with holding on to staff. And so, publicity shy though Goldman may be, the outcry over May’s speech this week makes it look exactly the way it wants to. |
| “Any person being seen as at the global top of what they do, be it in basketball, green technology, fashion or chess, will be an interesting speaker for a bank trying to position itself as the global leader in its own field,” says one insider. Another adds: “It is the rock-star effect. ‘Look who we know! Look who we got!’ They say that politics is show business for ugly people. Getting a big-name politician in is just part of that – a celebrity to cheer up and maybe stimulate very well-paid but hard-pressed employees.” | “Any person being seen as at the global top of what they do, be it in basketball, green technology, fashion or chess, will be an interesting speaker for a bank trying to position itself as the global leader in its own field,” says one insider. Another adds: “It is the rock-star effect. ‘Look who we know! Look who we got!’ They say that politics is show business for ugly people. Getting a big-name politician in is just part of that – a celebrity to cheer up and maybe stimulate very well-paid but hard-pressed employees.” |
| That May was invited to Goldman Sachs and that she accepted, then, is neither surprising nor remarkable, City insiders agree. While her argument may have been more passionately stated behind closed doors, there was technically no gap between what she said at Goldman and her public position at the time and she was not paid – in line with a generally adhered-to rule that those in office come for free. Though there are other opportunities for political leaders to snuggle up to top bankers, like the World Economic Forum in Davos and conferences such as Bilderberg, building some bridges to Goldman must have felt to May like a smart thing to do – not least because so many of her recent parliamentary colleagues have ended up with a role in banking as “special advisers”: John Major at Credit Suisse, Gordon Brown at Pimco, Alistair Darling at Morgan Stanley, William Hague at Citibank and of course Tony Blair taking a reported £2.5m a year at JP Morgan. | That May was invited to Goldman Sachs and that she accepted, then, is neither surprising nor remarkable, City insiders agree. While her argument may have been more passionately stated behind closed doors, there was technically no gap between what she said at Goldman and her public position at the time and she was not paid – in line with a generally adhered-to rule that those in office come for free. Though there are other opportunities for political leaders to snuggle up to top bankers, like the World Economic Forum in Davos and conferences such as Bilderberg, building some bridges to Goldman must have felt to May like a smart thing to do – not least because so many of her recent parliamentary colleagues have ended up with a role in banking as “special advisers”: John Major at Credit Suisse, Gordon Brown at Pimco, Alistair Darling at Morgan Stanley, William Hague at Citibank and of course Tony Blair taking a reported £2.5m a year at JP Morgan. |
| She may have had more immediate reasons for moving closer to Goldman, too, and if she made any contacts in the margins of her speech these could actually come in useful amid all the uncertainty over a hard, soft or “dirty” Brexit. In his memoir Back from the Brink, Darling, the chancellor of the exchequer in 2008, recounts how at one point the head of JP Morgan, Jamie Dimon, openly threatened him with no longer buying British sovereign bonds if the government were to introduce a tax on bonuses. Global banks can relocate, and then there is the possibility of a global bank’s chief economist talking down your country. Today’s global mega banks wield immense power and while banks have good reason to lobby governments, politicians have good reason to lobby banks, too. | She may have had more immediate reasons for moving closer to Goldman, too, and if she made any contacts in the margins of her speech these could actually come in useful amid all the uncertainty over a hard, soft or “dirty” Brexit. In his memoir Back from the Brink, Darling, the chancellor of the exchequer in 2008, recounts how at one point the head of JP Morgan, Jamie Dimon, openly threatened him with no longer buying British sovereign bonds if the government were to introduce a tax on bonuses. Global banks can relocate, and then there is the possibility of a global bank’s chief economist talking down your country. Today’s global mega banks wield immense power and while banks have good reason to lobby governments, politicians have good reason to lobby banks, too. |
| This week, May must have regretted her decision to speak at Goldman, given that the larger public is unlikely to understand that unlike Clinton, who charged an estimated $200,000 per speech, May got nothing. Their audiences appear to have been very different, too. Clinton seems to have spoken mainly to groups of Goldman Sachs clients whom the bank was probably hoping to impress. These are so-called professional asset managers, whose job is to invest the money of pension funds, insurers, rich families or oil-rich countries. Many of them might very well make more than the Goldman Sachs bankers trying to sell them investment products. The term here is “client entertainment” – giving your clients something interesting for free in the hope of securing some business later. Recent regulation makes it increasingly hard for banks and brokers to take clients to expensive restaurants, exclusive cultural events or prestigious football, tennis or golf tournaments in exotic locations. But flying out for a speech by a global political celebrity is usually still allowed. In the words of one insider with decades of experience: “Bringing in a very expensive speaker is also a way of saying to your clients: ‘See how much we care for you, that we paid XXX to get this person here! We play in the big leagues.” | This week, May must have regretted her decision to speak at Goldman, given that the larger public is unlikely to understand that unlike Clinton, who charged an estimated $200,000 per speech, May got nothing. Their audiences appear to have been very different, too. Clinton seems to have spoken mainly to groups of Goldman Sachs clients whom the bank was probably hoping to impress. These are so-called professional asset managers, whose job is to invest the money of pension funds, insurers, rich families or oil-rich countries. Many of them might very well make more than the Goldman Sachs bankers trying to sell them investment products. The term here is “client entertainment” – giving your clients something interesting for free in the hope of securing some business later. Recent regulation makes it increasingly hard for banks and brokers to take clients to expensive restaurants, exclusive cultural events or prestigious football, tennis or golf tournaments in exotic locations. But flying out for a speech by a global political celebrity is usually still allowed. In the words of one insider with decades of experience: “Bringing in a very expensive speaker is also a way of saying to your clients: ‘See how much we care for you, that we paid XXX to get this person here! We play in the big leagues.” |
| The same dynamic seems to be at work when global banks bring in a celebrity to speak to their youngest recruits. A young maths student who finished an internship at a big global bank said: “When they flew in a famous politician from the other side of the globe just to talk to us interns, you can’t help feeling, well, important. You think, wow, my bank can do this?” | The same dynamic seems to be at work when global banks bring in a celebrity to speak to their youngest recruits. A young maths student who finished an internship at a big global bank said: “When they flew in a famous politician from the other side of the globe just to talk to us interns, you can’t help feeling, well, important. You think, wow, my bank can do this?” |
| All in all, those responsible for crafting Goldman’s image as the world’s most powerful and well-connected bank must have been happy to see this week’s outrage about May’s speech. Could the same be said of those actually in the audience? | All in all, those responsible for crafting Goldman’s image as the world’s most powerful and well-connected bank must have been happy to see this week’s outrage about May’s speech. Could the same be said of those actually in the audience? |
| Goldman’s top brass are paid well over £3m a year, and nearly all of them must make the bank a multiple of that amount in order not to be demoted or “culled” by the end of each year. Based on how much the average senior banker works, £3m breaks down to a little under a thousand pounds an hour. So there they were, sitting in a room listening to May rehearsing the same arguments she had made many times before, positions she was to abandon within days after the referendum. Even worse, May’s speech might very well have contributed to the false sense of complacency in the City over the referendum result. In retrospect, then, attending the speech must now feel to those in the audience like a momentous waste of time. In City jargon: a pretty bad trade. | Goldman’s top brass are paid well over £3m a year, and nearly all of them must make the bank a multiple of that amount in order not to be demoted or “culled” by the end of each year. Based on how much the average senior banker works, £3m breaks down to a little under a thousand pounds an hour. So there they were, sitting in a room listening to May rehearsing the same arguments she had made many times before, positions she was to abandon within days after the referendum. Even worse, May’s speech might very well have contributed to the false sense of complacency in the City over the referendum result. In retrospect, then, attending the speech must now feel to those in the audience like a momentous waste of time. In City jargon: a pretty bad trade. |
| Joris Luyendijk is the author of Swimming with Sharks: My Journey into the World of the Bankers | Joris Luyendijk is the author of Swimming with Sharks: My Journey into the World of the Bankers |