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Fullerton, a former managing director at JPMorgan and the founder of the Capital Institute,wrote to Blankfein on the last day of 2009. “Surely you must acknowledge that this gain, much less the avoidance of a total loss, is attributable directly to the taxpayer bailout of the industry.”
    James Cramer, who worked as a stockbroker in Goldman’s wealth management division before starting his own hedge fund and then a new career on CNBC, said it is patently obvious that without the government’s bailout Goldman would have been swept away, along with Bear Stearns, Lehman Brothers, and Merrill Lynch. “They did not get it and they still don’t,” he said of Goldman’s comprehension of the help the government provided. He then launched into a Socratic exposition. “How did the stock go from fifty-two dollars back to a hundred and eighty dollars?” he wondered. “Is it because they worked really hard and did better? Was it because they had a good investor in Warren Buffett? Or was it because the U.S. government did its very best to save the banking system from going to oblivion, to rout the people who had been seriously shorting stocks, to be able to break what I call the
Kesselschlacht—
the German word for battle of encirclement and annihilation—against all the different banks that had been going on? Who ended that? Was it Lloyd? Was it Gary Cohn [Goldman’s president]? No. It was the United States government.” Cramer said, “It did not matter” at that moment “that Goldman was better run than Lehman.” What mattered was “the Federal Reserve decided to protect them and the Federal Reserve and Treasury made it be known you’re not going to be able to short these stocks into oblivion and we’re done with that phase.”
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    W HEN, IN 2009, Congress and the SEC started investigating Goldman’s business practices leading up to the crisis and how it had managed to get through it intact, they found much unappealing—and perhaps fraudulent—behavior. In April 2010, Congress and the SEC started making their findings public, and as the slings and arrows of outrageous fortune began to fly, one wound after another opened up on Goldman’s corpus, handing Blankfein a series of Job-like tests that he never anticipated and that, for all his smarts, he may ultimately prove incapable of handling.
    Blankfein now had the burden of the firm’s history on his shoulders. He is a somewhat perplexing fellow, whose balding pate and penchant for squinting and raising his eyebrows at odd moments give him the appearance of the actor Wallace Shawn in the 1981 Louis Malle film
My Dinner with Andre
. He has been described as looking “like a chipper elf, with a round, shiny head, pinchable cheeks, and a megawatt smile.” But for a Wall Street titan, he is also surprisingly quick-witted, self-aware, and thin-skinned.“Of course I feel a huge responsibility to address theassault on Goldman Sachs’s reputation,” he said recently in the comfort of his spare, fairly modest office on the forty-first floor of Goldman’s new forty-three-story glass and steel $2.1 billion skyscraper in lower Manhattan. “Of course it’s not relaxing. Of course I think about this all the time. Of course it takes a toll. I think it takes a toll on the people around me, which in turn takes a further toll on me.”
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    T HE FIRST ACID TEST for Blankfein came on April 16, 2010, when, after a 3–2 vote along party lines, the SEC sued Goldman Sachs and one of its vice presidents for civil fraud as a result of creating, marketing, and facilitating, in 2007, a complex mortgage security—known as a synthetic CDO, or collateralized debt obligation—that was tied to the fate of the U.S. housing market. The CDO Goldman created was not composed of actual home mortgages but rather of a series of bets on how home mortgages would perform. While the architecture of the deal was highly complex, the idea behind it was a simple one: If the people who took